Gold and Bitcoin surges on banking concerns, while oil stumbles

• Low trading volumes and a deteriorating outlook send oil prices sharply lower
• Gold surges above $2000 level as banking concerns return
• Bitcoin still capped by $30,000 level

Oil

It got ugly a lot faster than any oil trader expected. ​ Energy traders were turning constructive, even last week, the recent oil bear, Citi’s Ed Morse said ‘were close to a bottom in oil prices.’ Oil is in the danger zone as the banking crisis is crippling the short-term outlook for the economy and driving fears that we could be recession bound a lot faster.

Oil basically has weakening prospects from the world’s two largest economies, China and the US, and if the macro backdrop deteriorates, momentum selling could easily send prices below the $70 level.

Gold

Gold prices were in the danger zone, but the return to banking crisis fears has triggered a flight-to-safety. ​ We didn’t get a chance to enjoy a short period of calm following the JPMorgan deal for First Republic’s assets. ​ Bond market chaos is seeing yields plunge, which is taking away all the risks of the Fed tightening beyond this week.

Gold will remain a volatile trade, especially if it refuses to take the bait and keep all options on the table for the June meeting. ​ Recession fears are growing and financial stability concerns should give the Fed permission to signal they are ready to pause after delivering one last rate hike. ​ The debate to not even hike might lead some dissents tomorrow, which is something we have not seen.

Bitcoin

Bitcoin is back as banking jitters quickly return. Bitcoin is up 3% on the day, but still seems capped by the $30,000 level. ​ Today’s banking turmoil was somewhat expected to happen over the coming months, not the following day from a massive bank rescue. ​ Bitcoin is becoming appealing again given how bad financials are getting hit. ​ ​ ​

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