Commodities and Cryptos: Oil higher, Gold tanks, Ethereum dominance

Oil

After what was a brutal week for oil markets, crude prices are trying to hold onto small gains after a robust nonfarm payroll report supports the idea that the world’s largest economy is strengthening. A stronger dollar however will likely prove to be a big drag over prices in the short-term. The crude demand outlook has many headwinds ahead given COVID variants, but that should not move the oil market away from its deficit.

Vaccine mandates across Corporate America could help further get COVID under control which should support the demand outlook going forward. It is important to note that earlier reporting from the Wall Street Journal’s Norman sources that Iran was committed to return to meaning Iran talks in Vienna. His tweet was deleted. The supply outlook for crude remains very uncertain, but it seems we could see a more conciliatory tone out of Iran which could support the expectation that sanction relief could happen closer to year end.

Gold

Gold prices did not stand a chance following this very strong nonfarm payroll report. This employment report was terrible for gold as it did not support needs for safe-havens and given a good chunk of the wage gains is from low-paying jobs, it did not do much for driving inflation hedges.

Gold could have further downward pressure as Fed tapering bets grow following this strong NFP beat, upward revisions, and strong declines with both temporary layoffs and permanent job losses.

Gold is in the danger zone after breaking below key moving averages, longer-term trendlines, and prior support levels. Gold may find some support from the $1,750 level, but if that breaks prices could tumble towards the psychological $1700 level.

Cryptocurrency

A massive upgrade for Ethereum should prove to be very bullish for the cryptocurrency’s long-term outlook. The pace at how tokens are minted has been lowered, which will help make it a little bit more scarce, but nothing like Bitcoin’s finite 21 million coins. Ether’s tackles lots of key issues as it delivers lower fee volatility, improved market efficiency, and takes aim at reducing the network’s energy consumption by more than 99%, which would make it the greenest choice for the cryptoverse.

Once Wall Street gets beyond the market volatility from a potential mini taper tantrum from the Fed, Ethereum dominance could continue as ESG investors become ready to embrace the dramatically improved energy consumption outlook. Ethereum will likely become the favored crypto trade on Wall Street and could see limited resistance towards the $3000 level.

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