Oil
Crude prices remain very choppy as energy traders await a decision from the Biden administration over an SPR release. It seems the energy market is convinced that even if the US resorts to tapping the strategic petroleum reserve, the benefits would be minimal and yield little assistance to the US consumer.
The oil market deficit seems likely to last a while longer as the Biden administration appears unwilling to ask US shale to increase production. OPEC+ has the oil market right where it wants it and they will now likely benefit with $80 oil at the minimum over the next couple of years.
Gold
Gold clearly has a short-term barrier at the $1880 level. Gold prices were unable to get their groove back as a strong dollar emerged after US stocks attempted to make fresh record highs and after another round of hawkish comments from Fed’s Bullard. Bullard noted,
“think it behooves the committee to go in a more hawkish direction in the next couple of meetings, so we are managing the risk of inflation appropriately.”
Gold’s bullish trend remains intact, but exhaustion from the recent rally could see prices drift towards the $1825 level.
Bitcoin
A strong dollar helped Bitcoin take a quick dip below the $60,000 level before stabilizing. Another futures-based Bitcoin ETF started to trade, but that did not really move the needle in attracting new investors. Bitcoin has entered a consolidation phase as investors are in wait-and-see mode to see what happens with inflation. Bitcoin may continue to attract inflation hedges, but if pricing pressures trigger rapid rate hiking action from the Fed, that could trigger a massive wave of risk aversion that would penalize cryptos.
Bitcoin and Ethereum seem poised to finish the year as the top performing assets, but if we see Wall Street grow nervous over a policy mistake by the Fed, cryptos would get hammered. Bitcoin’s longer-term outlook is still much higher, but the short-term outlook is cloudy at best.