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Oil Pulls Back, Gold Stable, Bitcoin Recovery

Published 01/14/2021, 12:05 AM
Updated 03/05/2019, 07:15 AM

Oil slips after another bright start

Oil started yesterday on the front foot but slipped as the US open approached and has been lower since.

It’s been a remarable rally for crude in recent months, with OPEC+ giving it one final push last week after deepening cuts, thanks largely to Saudi Arabia. The decline came just as WTI hit its highest level in around a year, which may have contributed to some profit taking.

Near-term risks remain for oil markets, with COVID causing huge problems in many countries which means we’re likely to see more restrictions for longer. The action from OPEC+ may limit the downside but a little profit taking may kick in soon enough.

Gold flat as yields pull back

Gold was relatively flat yesterday after stabilizing around $1,850 in recent sessions.

This was a major area of support late in the summer so may be having a psychological impact this week. Fed policy makers have eased concerns about a taper tantrum which has taken the edge off yields and, in turn, the pressure off gold prices.

Whether that will lead to a sustained decline in yields or not is another thing. A move back below 1% on the 10-year could be a positive sign for gold, which has a lot of lost ground to make up after it crumbled last week.

Slow comeback for Bitcoin

Bitcoin is staging its comeback, albeit at a more moderate pace than we’ve become accustomed to seeing.

ECB President Christine Lagarde’s scathing verdict on Bitcoin were brushed aside by a community used to being cast aside by people in positions of power.

While some may even view this positively, a badge of honor even, it shows the challenges the cryptocurrency faces in becoming mainstream even if it can become a more stable currency, which it has shown no signs of doing.

Lagarde dismissed its prospects of becoming a currency and correctly labelled it a highly speculative asset. It has many enormous obstacles to overcome.

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