Oil

Crude prices are holding up despite fresh COVID shutdowns in China and after a searing inflation report and abysmal consumer sentiment survey suggest the US consumer is weakening. Oil was boosted earlier after the Saudis delivered less crude than had been requested by the Chinese. The oil market is still very tight and any weakening in US consumption will only really be felt towards the end of the year.

Despite a very strong dollar, WTI crude is down only a tenth of a percentage point. Some traders are entering de-risking mode as the economic outlook continues to darken, but no one really wants to give up on the best trade of the year, which is oil and energy stocks.

Gold

Gold’s reaction to the inflation report was a rollercoaster ride as traders tried to gauge short-term and long-term shifts with Fed policy expectations. The initial shock of a scorching inflation report sent gold prices to new session lows as traders quickly raised Fed rate hike expectations for the September meeting. Then, 5-year and 30-year Treasury yields reversed and concerns about growth sparked flows into safe-haven gold.

Gold traders knew a hot inflation report would be unsettling and technical selling could remain strong. The dollar is back king and with further rate hikes slated for the Fed, gold could be vulnerable to retest May lows.

Gold pared losses after consumer sentiment slumped, prompting some traders to believe calls for aggressive tightening at year-end may have been overdone.

Bitcoin

Considering all the selling happening on Wall Street, Bitcoin is doing well. A very hot inflation report pushed Treasury yields sharply higher at the short end of the curve, which killed risk appetite for equities and drove the crypto lower.

Bitcoin is below the $30,000 level and further selling could push prices up towards the $28,000 level. The $28,000 level is a key support for Bitcoin and if it breaks over the next few days, it could be the catalyst for a crypto crash over the weekend.

A weekend slump in Bitcoin could see prices plunge towards the $25,500 area, with $22,500 being the most extreme scenario. Weekend crypto outages are sometimes followed by rapid recovery, but the current environment and subdued interest may slow recovery.

This article is for general information purposes only. It is not investment advice or a solution for buying or selling securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for everyone. You could lose all your deposited funds.

With over 20 years of trading experience, Ed Moya is a senior market analyst at OANDA, producing up-to-the-minute cross-market analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. . His particular expertise covers a wide range of asset classes including currencies, commodities, fixed income, equities and cryptocurrencies. During his career, Ed has worked with some of Wall Street’s leading forex brokerages, research teams and information services, including Global Forex Trading, FX Solutions and Trading Advantage. Most recently, he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks, including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His opinions are endorsed by the world’s most renowned news agencies including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.