Oil pares gains as lockdowns become more severe
New and extended lockdowns may be taking their toll on broader risk appetite today and it may have taken the edge off oil prices which appeared to be continuing their impressive late 2020 run into the new year.
The lockdowns are becoming more severe which is going to naturally take its toll on demand, the difference this time being that the end is in sight and OPEC+ has its house in order. Even if the group raises production by 500,000 barrels in February, I don’t expect the market will sink in any significant way, but we know the sway Saudi Arabia has. An increase of that magnitude is in no way guaranteed.
Gold eyeing $2,000
Gold burst through $1,900 to start the year with a softer dollar giving the yellow metal the kick it craved. With that psychological resistance overcome, gold gathered strong momentum quickly before running into resistance just shy of $1,945. With gold being backed so heavily on that breakout and the outlook for the dollar looking no better, another run at $2,000 suddenly looks a matter of time.
Bitcoin doing what bitcoin does
Bitcoin in recent days doing exactly what bitcoin does. Caught in a euphoric wave, the cryptocurrency came within a whisker of $35,000 within a few weeks of breaking $20,000 for the first time ever. This is bitcoin as we all know it, as was the sudden and sharp pullback it experienced at the start of the year. Of course, in any other asset class, a sudden drop of close to 20% is quite the correction. Compared to what preceded it, it’s nothing and even double wouldn’t massively worry bitcoin bulls.