Commodities and Cryptos: Oil surges post EIA report, Gold stumbles post hawkish FOMC, Bitcoin bounces back

Oil

Crude prices rallied after US stockpiles tumbled to the lowest levels since October 2018.  Oil market fundamentals are turning bullish again as the China slowdown fears ease, supply shortages with natural gas could lead to increased demand for oil, and as White House is expected to continue to support renewable energy, likely keeping deterring big investments into new oil wells.

The FOMC decision sent the dollar on rollercoaster ride that led to a slightly stronger dollar that helped oil prices pare today’s gain.

Gold

The gold price rally from the somewhat dovish Fed statement/projections was short-lived after the Fed Chair Powell’s presser signaled substantial progress has been achieved on inflation, which could suggest hotter-than-expected readings could lead to a more aggressive Fed.  Demand for safe-havens did not get any favors from Powell as he noted that the Evergrande crisis seems very particular to China and that the corporate debt defaults in the US are very low.  Powell emphasized the importance that the debt ceiling is raised in a timely fashion, which keeps the pressure on Congress.

Gold is losing its luster after a modestly hawkish Powell signaled a gradual tapering could end in the middle of next year.  If China remains aggressive in supporting the economic recovery and if the Evergrande crisis continues to de-escalate, gold could quickly give the majority of this week’s gains.

Bitcoin

Bitcoin may have got its groove back after dangerously piercing below the psychological $40,000 level.  It has been a rough couple of weeks for Bitcoin, but optimism still remains that entire crypto space is able to handle some of the regulatory actions that are looming.  The Treasury unveiled its first round of sanctions on crypto exchange Suex.

Some investors are anticipating a US Bitcoin ETF as the next big catalyst for Bitcoin to make another run higher.  Bitcoin held onto its gains despite the stronger dollar that emerged post Fed.  Bitcoin showed impressive resilience during the Fed, well outperforming gold and US stocks.

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