Commodities and Cryptos Update: Oil surges, Gold and Bitcoin pare this week’s gains

Oil

Crude prices are rising again as Moderna’s COVID vaccine is poised to get vaccine authorization from the FDA.  Successful vaccine execution is what is needed to send WTI crude well above the $50 level and that is unlikely to happen for months.  The virus spread across the US is going to test hospital capacity over a few states and that should see lockdowns extended throughout the next couple of months.  New York City is on the verge of another shutdown after Governor Cuomo tweeted that NY had 12,697 new COVID cases, the most since the pandemic started.

Gold

Gold got its groove back after the Fed signaled traders should continue to expect QE for a long time and as Congress inches toward a fiscal stimulus deal.  Gold was able to retest the $1,900 level yesterday but profit-taking and a bounce back in the dollar has prices slightly down on the day.

Despite optimism the US lawmakers will deliver a COVID relief bill and that Brexit trade deal talks will ultimately avoid a hard exit, safe-haven flows are still coming into gold.  Gold will see some inflows as the virus situation across the US and Europe is bleak as hospital capacity concerns rise and as the US blacklists over 60 Chinese firms.  The Trump administration is expected to ratchet up tensions before President-elect Biden takes over.

Gold appears unfazed by vaccine news and could eventually stabilize above the $1900 level next week.

Bitcoin

Bitcoin’s historic rally appears ready for a holiday break.  The prospects of more fiscal stimulus have already been priced in and it seems some profit-taking appears appropriate given today is the last full trading day of the year.  Institutional interest is likely to only grow over the next couple of quarters and that should attract buyers on any major dip.  Bitcoin’s popularity is only growing, and a new wave of retail traders find it more attractive than gold.  Bitcoin will likely underperform in 2021 as a safe-haven asset but still should become an inflation hedge for many.  Bitcoin volatility will likely be heightened over the holiday period and traders should not be surprised to see a broadening formation around the $20,000 to $25,000 region.

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