Gold rebounds on Powell Pause hopes and Debt-Limit Roadblock

• US oil rig counts fall 11 to 575
• Gold starts to get shine back as safe-haven demand returns
• Bitcoin steadies near lower boundaries of trading range

Oil

Crude prices were having a great week as the US economic outlook dramatically improved as lawmakers seem likely to reach a deal on the debt ceiling. Debt ceiling optimism quickly disappeared on Friday and that sent oil prices sharply lower.  The news wasn’t all negative for crude prices as Fed Chair Powell paved the way for a June hold.

China hasn’t been doing oil any favors as the PBOC is also showing too much patience with rates.  The Chinese economic recovery is struggling and that has been kryptonite for any oil rallies.

Oil looks like it might be stuck in a range around the low-$70s until we see further evidence that a debt deal will be reached and that supercore inflation doesn’t heat up.

Gold

Gold’s record run to uncharted territory came to an abrupt end over the past couple of weeks on debt ceiling optimism, surging Treasury yields following hawkish Fed speak, and as recession fears ease. Gold got a boost from Friday’s headlines of a potential June Fed hold, debt ceiling drama, and further banking rescues. Gold remains a favorite safe-haven trade and if debt ceiling talks continue to struggle, prices could easily stabilize above the $2000 level next week.

Crypto

A month ago, Bitcoin was surging, passing the $30,000 level for the first time since the summer of 2022.  Regional banking concerns and rising Fed rate cut bets provided a lot of support for cryptos. The bullish catalysts have now faded away and so has roughly 30% of this year’s rally.  Bitcoin did not get any favor from SEC Gensler earlier in the week, just the standard comments on how rules are already in place. The regulatory question remains the key for the cryptoverse and traders will have to remain patient.

Bitcoin held onto its gains as debt-limit struggles abruptly ended and as Fed Chair Powell signaled openness to pause the Fed’s tightening campaign.

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