Oil pops, gold plops, bitcoin eyes record

Oil rally continues

The rally in crude prices is accelerating as energy traders look beyond the pandemic, Asia leads the global economic recovery, and as the dollar’s days are numbered with a Yellen led Treasury raising the likelihood for increased policy coordination with the Fed.

Too much of the crude demand focus has been on lockdowns across Europe and the US and not China’s economic recovery and travel rush, which outlines what the rest of the world can expect.  Some analysts are expecting China to recover over 95% of jet fuel demand from a year ago and the global outlook will greatly improve once Covid vaccine implementation begins.

WTI crude finally surged beyond major resistance that has been firmly in place since the summer.  Bullish momentum is here, but the shortened trading week could see this rally fizzle around the USD45 level.  The path for oil should be higher in 2021 as Covid vaccines will bring much of the world back to pre-pandemic life which will trigger a strong rebound for crude demand.

Gold falls to USD1800

It seems nothing can stop gold’s slide. Gold has fallen to critical support at the USD1800 level even as the dollar is modestly softer and now it seems the Biden administration is poised to have Janet Yellen lead the Treasury which should support a coordinated stimulus response with the Fed.  Today’s weakness for gold is mainly the abandonment of safe-haven trades as US stocks soar due to coronavirus vaccine optimism and relief the formal transition process has begun for President-elect Biden.

Bearish momentum can take gold another USD50 lower in a blink of an eye, but longer-term investors will start to scale back in.  The Trump administration will likely unleash several policy actions against China that will be hard for President-elect Biden to unwind.  Many will say gold is a falling knife right now, but the longer-term bullish case of the reflation trade will keep longer-term investors interested.

Bitcoin eyes USD20,000 level

It could be only a matter of time for Bitcoin.  Some nervousness is growing for many crypto traders as thin liquidity could see Bitcoin have exaggerated moves once testing record-high territory.  Bitcoin is enjoying today’s broader market risk-on session, but will likely see momentum remain the key driver.  The amount of profit-taking and selling interest at USD20,000 is growing and that could pave the wave for prices to overextend towards the USD21,000 level.  Trading conditions are likely to be volatile for the remainder of the week and crypto traders should expect USD1000 swings in a matter of minutes.

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