Oil edges higher, gold consolidates

Oil rally faces near-term challenges

Brent crude ended last week around the USD50 level and is edging a little higher again today, up more than half of one percent. We’re probably seeing the rally run out of steam a little bit, with the move from OPEC+ now priced in and near-term risks mounting. The vaccine story is by far the most important when it comes to the outlook but the Covid situation in the US is looking increasingly dire by the day. And with Germany going into a more intense lockdown, we’re likely to see more severe restrictions until the rollout of the vaccine starts to bring the numbers down. That could make January and February very challenging and force a very gradual increase from the group.

Gold consolidates ahead of the Fed

Gold has consolidated over the last few sessions after it failed to hold onto gains above USD1,850. It has found some support around USD1,830 though, and eyes are now on the Fed and Capitol Hill to see whether either line can be the catalyst that sees gold back above USD1,900. Should the Fed be successful in compressing the longer end of the yield curve and Congress find agreement on a relief package, gold could get a nice lift. Even just the former may do it, with a collapse in the negotiations ahead of the Fed meeting potentially necessitating more aggressive action. Time will tell.

Bitcoin eyeing records again

Bitcoin is having another run at the elusive USD20,000 barrier it seems, having last week found strong support around USD17,600. The price rallied back above USD19,300 but has pared back a little today, with some nerves and profit-taking maybe kicking in given the recent experience around these levels. I’d be very surprised if bitcoin doesn’t break above here before year-end, maybe even week-end. The support we saw last week was not indicative of a failed rally and the buzz a move into uncharted territory would bring could make it a really interesting end to 2020.

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