Oil slides on mutant Covid in UK
Crude prices plummeted as a fast-spreading variant of the coronavirus emerging from the UK would cripple all travel across Europe and the US. The short-term crude demand outlook just got dealt a massive blow that will provide added uncertainty over the next couple of months.
Russian deputy PM Novak, formerly the energy minister, noted that the oil recovery will be slower than what was initially anticipated and that OPEC+ output cooperation can’t be endless. Travel restrictions over the next several weeks will complicate OPEC+ plans to gradually raise output. The monthly meetings will be very tense and keep oil prices volatile until the virus spread is under control across both Europe and the US.
Gold slips as dollar jumps
Gold went on a rollercoaster ride after initially seeing strong safe-haven demand send prices above USD900 before freefalling after the dollar surged. Today’s price action for gold reminded traders of the panic selling that occurred in March. The prospects of more stimulus have been driving gold higher, but today’s short-term dollar surge is disrupting that thesis. Congress is poised to deliver a second stimulus package today, but that has mostly been priced in for gold.
Gold’s bullish trend is still intact but could still be vulnerable if the dollar comeback lasts a couple of days. If risk aversion reasserts itself, the USD1850 level should attract buyers for bullion.
Bitcoin under pressure, more volatility likely
The best performing asset of the year, Bitcoin is under pressure as a new COVID-19 strain that spreads more quickly is triggering some panic selling across all risky assets. Bitcoin had a steady flow of negative news after the Friday close when the Treasury proposed new disclosure rules for cryptos and Elon Musk tweeted what appeared to be an endorsement for Doge, a competing cryptocurrency. Bitcoin volatility will remain extreme over these next couple of weeks of thin trading.
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