Crude prices remain elevated as both the supply and demand side fundamentals remain very bullish. The energy market no longer has oversupply concerns as US production will likely remain stable and as OPEC+ is sticking to its plan to gradually increase output. The crude demand outlook is getting mixed headlines, but nothing too negative that will change the overall improving theme. Singapore’s COVID crackdown is only for a few weeks and should be viewed as health experts taking an abundance of caution. The situation in India remains bleak and pressure continues to grow for PM Modi to capitulate and announce lockdowns.
WTI crude is higher but will have difficulty breaking above the early March high until India, the world’s third largest oil importer starts to see COVID cases declining. The path higher for oil is clearly higher, it just needs to see that what is happening in India does not happen anywhere else.
Gold prices are not breaking despite a stronger dollar that stemmed from investors turning cautious on stocks. Gold still seems poised to break above the USD1,800 level as the Fed turned their ultra-accommodative stance on monetary policy on cruise control for the next couple of months. Now that a ceiling has been put in place for Treasury yields, gold could very soon see a wave of bullish momentum.
Bitcoin’s underperformance to the other altcoins is good news for gold. Since December, December gold was losing some institutional traffic to Bitcoin, but many of those traders will refrain from increasing their crypto exposure and just transition Bitcoin holdings into other coins.
Gold is slowly turning bullish; it just needs to break above some key technical levels before Wall Street will become believers again.