Vaccine news boosts oil, weighs on gold

Oil basks in more vaccine news

Oil prices once again basking in the vaccine news, with Brent and WTI hitting near-three month highs and threatening to break and hold above their post-summer ranges. It’s holding onto these gains once breaking above the range that’s proven so challenging for crude prices, but the AstraZeneca/Oxford news could be the straw that breaks the camels back.

Further resistance is not far away but prices will take a run at them, buoyed by the post-summer breakout which could massively test the defences. In WTI, next resistance lies around USD44.50, with Brent seeing it around USD47.50. A break above here would take prices right back to early in the pandemic.

The question then becomes just how motivated will OPEC+ be to delay January’s planned production increase of two million barrels? Prices at the current levels are far more sustainable and there are now three vaccines that are likely to be rolled out before the end of the year. A postponement may not have the support it would a month ago.

Vaccine pushes gold closer to bearish breakout

Gold isn’t particularly fond of all this vaccine news and is once again finding itself trading lower and within a whisker of major support. The yellow metal has found decent support around USD1,850 for months now but that’s increasingly coming under threat, as investors continue to price in a vaccine-driven recovery.

The level hasn’t broken yet but if it does, the selling could accelerate rapidly. The next support below here lies around USD1,800 and we could see it tested very quickly. I’m still not convinced we’ve seen the end of gold’s ascent, with plenty more stimulus still on the horizon. The Fed and ECB are likely to unleash more in December in response to the latest Covid surge and, in the case of the former, delayed agreement on fiscal support. That should also come, all of which could give gold its spark back.

Bitcoin teasing as new highs await

They say no publicity is bad publicity. Well, it seems we’re back in a moment where no news is bad news for bitcoin. It’s ascent has been incredible over the last couple of months and it’s showing little sign of slowing. It has seen a slight pause as it closes in on a new record high and should it achieve that, who knows what will come next.

Accurately predicting an end of year price for bitcoin is pointless, it could just as easily be USD50,000 as USD15,000. We’ve seen what this can do before and the difference now, compared to last time it was at these levels, is that it only feels like the beginning. The hype isn’t yet what it was; a break to new highs could bring that and we know what that means. Buckle up, it’s going to be quite the ride.

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