Oil pulls back, gold edges lower

Oil may see a minor correction

Oil prices are pulling back a little today after failing to break through previous highs on Wednesday. WTI is seeing serious resistance around USD54 which may drain momentum out of the rally that was looking in good shape. Perhaps we’re finally seeing some profit-taking after a solid run in crude prices.

The key area for WTI now is USD52, with a move back to here completing a double top in the near-term. A break of this level could see it move back towards USD50, a still very healthy but psychologically significant price level.

Oil prices are still in a very strong position and even a minor correction won’t raise any alarms. It’s been a great run and OPEC+ stands ready to support the market as and when it’s needed. Near-term risks remain and could start to play more of a role in the mindset of traders but it’s still too early to make such assumptions.

USD still a risk for gold

Gold is slightly lower today after breaking back above USD1,850 on Wednesday as Treasury yields remained off their highs and real yields continued to fall. This may reflect an acceptance, for now at least, that the Fed are in this for the long haul, regardless of higher inflation expectations. Time will tell if they’ll hold their nerve.

It’s looking much more comfortable for gold suddenly, after USD1,800 was so strongly defended. Gold bulls may now be eyeing USD1,900. Whether that can be achieved depends heavily on what the dollar does next. It’s eased off somewhat this week after a promising start to the year, but is it’s resurgence really over so soon? I’m not convinced. A move back above 91 in the dollar index could spell bad news for gold and see those key support levels coming back under pressure.

Bitcoin showing vulnerability

Bitcoin is showing some vulnerability at the end of such a strong month. It was seeing some pressure on USD34,000 and USD33,000 yesterday and both have buckled, making a run at USD30,000 highly likely. This level looks very vulnerable and a break below it is bad news in the near-term for bitcoin and cryptos in general.

If this level falls, I wouldn’t be surprised to see a test of USD20,000 before too long. We may not see a break of USD30,000 straight away – although with bitcoin you never know – it may consolidate a little more first and build support around here. But we may have to wait a little longer for that run at USD50,000.

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