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Risk Aversion Weigh on Oil and Gold, Bitcoin Rises on BlackRock ETF and EDX Launch

Published 06/21/2023, 12:58 AM
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Oil

Crude prices are lower on disappointment with the size of cuts with China’s key lending rates. ​ Oil seems locked in on anything and everything that has to do with China. ​ Last week, oil was supported by improving Chinese refiner quotas. ​ This week, energy traders are seeing oil weakness emerge on disappointing stimulus efforts. ​ WTI crude looks like it is starting to find some decent support at the $68 region and that should hold as long the Fed does spook markets that they might be ready to deliver more than two additional rate hikes. ​

Oil Futures Daily Chart

Gold

The gold bears are in control and momentum selling doesn’t seem to care that stocks are softer and as Treasury yields come down. ​ Wall Street is still thinking that the Fed will only deliver one more quarter-point rate rise but no one wants to be long gold before what will likely be a shortened week of hawkish Fed speak.

Fed Chair Powell will defend his FOMC performance. Fed’s Waller will stick to his stance of supporting further hikes. ​ Fed’s Goolsbee might be closer to supporting a pause. ​ A temporary rebound in housing data might push Fed’s Bowman might wait to see if that impacts the trend of lower rents. ​ ​ Fed’s Mester has been a true hawk and probably won’t say she sees a reason to pause rate hikes. ​ Fed’s Bullard will likely confirm he still supports two more rate hikes. ​

If gold selling accelerates, it could get ugly as major support won’t appear until the $1900 region. ​

Bitcoin

Bitcoin is slightly higher as the cryptoverse embraces BlackRock’s ETF filing and as EDX crypto exchange goes live. ​ Given the risk-off start to the trading week, Bitcoin’s slight gain is a positive sign. ​ Bitcoin still seems poised to consolidate here but it could start to muster up a rally if gold remains under pressure and if investors grow cautious with the potential headwinds for the stock market. ​ ​

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