Volatile session for commodities and cryptos

• After falling almost $20, oil rebounds as demand fears ease
• Gold tumbles from record highs as Fed rate cut bets get pushed back
• Bitcoin reverses initial NFP dip and follows broader market rally

Oil

Oil has found a bottom as risk appetite improves as banking turmoil eases and after employment reports from North America showed significant job strength and defied calls of a looming economic slowdown. After falling $19.74 from the April 12^th high, WTI crude has formed a clear bottom. ​ The oil fundamentals for supply are still somewhat bearish, but expectations are for OPEC+ to take care of that at next month’s meeting on output.

WTI crude seems like it ready to find a home comfortably above the $70 level, but oversupply fears for now should cap any rallies that get close to the $75 region. ​

Gold/Banking

After finally hitting record high territory, gold is under pressure after a hot NFP report pushed back Fed rate cut bets. It wasn’t just the US, Canada also posted robust job growth in April and that is delaying calls for an imminent economic slowdown. ​ The Fed’s next move could still be a cut, but if banking worries continue to ease and the economy remains resilient, some policymakers may want to resume tightening. ​

Gold is getting crushed as risk appetite is running wild today, but those drivers of easing banking worries and a resilient economy won’t last much longer. ​ It might take some time now, but gold still has a good chance to get back in a record setting mood. ​

Banking turmoil should remain, today’s rebound isn’t because optimism is growing for the commercial real estate space. ​ Regulators are scrambling and don’t have a clear plan to address the regional-banking crisis. ​ The FDIC will require big banks to provide more money to refill the deposit insurance fund, which is just another band-aid solution. The banks got some support after JPMorgan upgraded Western Alliance, Zions Bancorp and Comerica to overweight. Banking issues on not going away anytime soon given how exposed the regional banks are to commercial mortgages. ​

Bitcoin

Bitcoin plunged after an impressive jobs report pushed back Fed rate cut bets. Bitcoin was able to quickly recover those losses and is trading comfortably below the $30,000 level. ​ Today’s price action for Bitcoin is very constructive for the bullish case as it appears to be holding onto gains despite a massive rebound with the regional banks. Regulatory clarity didn’t significantly improve, but efforts are being made and that should be positive for cryptos long-term. ​ A bill is being proposed to give the New York Department of Financial Services more crypto authority.

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