- Low trading volumes and poorer prospects send oil prices sharply lower
- Gold rises above $2,000 level as bank woes return
- Bitcoin is still capped at $30,000 level
Oil
It turned ugly much faster than some oil traders expected. Energy traders were constructive, even last week, the recent oil bear, said Citi’s Ed Morse “was near a bottom in oil prices.” Oil is at risk as the banking crisis cripples the short-term outlook for the economy and fuels fears that we could be recession-bound much sooner.
Oil initially has a weakened outlook from the world’s two largest economies, China and the US, and if the macro backdrop worsens, selling momentum could easily send prices below the $70 level.
Gold
Gold prices were at risk, but the fear of a return to banking crisis has triggered a flight to safety. We didn’t get a chance to enjoy a brief period of calm after the JPMorgan deal for First Republic’s assets. The chaos in the bond market sees interest rates falling, removing any risk of the Fed tightening beyond this week.
Gold will remain a volatile trade, especially if it refuses to take the bait and keep all options on the table for the June meeting. Recession fears are growing and concerns about financial stability should give the Fed permission to signal that it is ready to take a break after delivering one last rate hike. The debate about not even going for a walk could lead to some dissent tomorrow, something we haven’t seen.
Bitcoin
Bitcoin is back as the banking crisis quickly returns. Bitcoin is up 3% on the day but still appears to be capped by the $30,000 level. Today’s banking crisis was something expected to happen in the coming months, not the day after a massive bank bailout. Bitcoin is becoming attractive again given how badly the economy is being hit.,
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With more than 20 years of trading experience, Ed Moya is a senior market analyst at OANDA, producing up-to-date intermarket analysis, coverage of geopolitical events, central bank policy and market reactions to corporate news. His particular expertise lies across a wide range of asset classes, including currencies, commodities, fixed income, equities and cryptocurrencies. During his career, Ed has worked with some of the leading forex brokers, research teams and news departments on Wall Street, including Global Forex Trading, FX Solutions and Trading Advantage. Most recently, he worked with TradeTheNews.com, where he provided market analysis on financial 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 views are trusted by the world’s most respected global news outlets, 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.
