Oil higher on Europe rolls out vaccines

Crude prices edged higher as the EU’s mass vaccination campaign begins and as risky assets across the board benefit from President Trump’s signing of the stimulus package.  WTI crude should struggle to break above the USD50 level as next week’s OPEC+ meeting next week should be a tense one.  Lockdown efforts have mostly been intensified but that is not preventing the Russians from pushing for output hikes in February.

The crude demand outlook appears to be intact despite a new virus strain, which appears will not derail the current vaccine rollouts. Thin trading conditions should see oil prices consolidate for the rest of the week, but risks for a dollar rebound and nervousness ahead of next week’s OPEC gathering could provide some headwinds.

Gold flirts with USD1900 level

Gold is on a rollercoaster ride this morning.  Gold prices initially were boosted after President Trump unexpectedly signed the pandemic-aid bill last night.  It seems likely Americans will only get direct payments of USD600 and not the USD2000 that Trump was demanding.  That is one of the reasons why gold’s rally to USD1,900 was faded.

Gold could consolidate until after the Georgia Senate runoff races, the next biggest risk event that will determine the outlook for stimulus for President-elect Biden’s first 100 days.  The backbone for many gold buyers is the USD14 trillion increase to the global money supply, a strong reminder that despite the rebound in yields, we will remain in a low-interest-rate environment for years to come.

Bitcoin gets the thumbs-up

Bitcoin demand remains relentless as institutional investors scale into their medium and long-term bets.  Millions of dollars are going into the cryptoverse and money managers just can’t buy it all at once.  Bitcoin is still the trendy trade on Wall Street and that might not go away as many new retail traders have lost confidence with fiat currencies.

After tentatively breaking past USD28,000, Bitcoin has settled closer to the USD27,000 level.  Bitcoin volatility remains elevated, but for now, it seems like it will attract buyers on every major dip.  Eventually, light holiday-week trading conditions should support a consolidation phase before Bitcoin breaks beyond the psychological USD30,000 level.

By Ed Moya