Gold surges higher, oil slides lower

Crude comeback cut short, time for OPEC+ action

The crude comeback has also run out of steam and WTI and Brent are around 3% lower this morning. It’s been a phenomenal rebound this week, just as oil prices were falling to very tricky territory but with dialogue seemingly underway to push back planned increases of two million barrels per day in January, downside pressures have significantly eased.

It’s time for OPEC+ to follow words with action though as statements earlier this week from Alexander Novak bought the group time but that will waver as Covid wreaks havoc and forces more lockdowns, weighing heavily on economic activity and demand in the coming months.

The key support levels for Brent and WTI now are once again USD39 and USD37, respectively. When this broke last week, the sell-off gathered pace. If it holds this time around, bulls may be encouraged. There may not be enormous upside but Brent did previously hit USD44 on the expectations of delayed production increases, so this level remains key. With WTI, USD42 is key to the upside, but USD40 could be an obstacle itself.

Gold bursts through major resistance

Gold has been really interesting over the last couple of days, bursting through near-term support and surging back above USD1,950 today. The moves have been driven by a plunge in the dollar, as risk appetite has improved over the course of the week and we face the prospect of more Fed easing.

Barring a shock twist in the election, gold may remain a favourite in the near-term as central banks turn on the taps again. The downside risk for gold is Covid and with countries going into lockdown, it remains significant. The next key levels remain unchanged, USD1,980 and USD2,000 to the upside, USD1,930 and USD1,920 below.

Bitcoin eyeing record highs

Another good day for bitcoin, which broke back above USD15,000 on Thursday for the first time since January 2018, falling just short of USD16,000 today. These are remarkable gains in a very short space of time and feels reminiscent of what we were seeing in late 2017 when the hype around bitcoin was incredible.

Clearly, not an enormous amount has changed on that front. Central banks going back into easing mode may be the justification for some for the move, or the uncertainty around the election, but I’m not convinced. This feels like another highly speculative move and we’ve seen before, it can rise very far very fast, but the drop can be very painful indeed.

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