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Commodities

Gold fast losing the battle to Bitcoin

The world’s flagship crypto Bitcoin impressive gains partly responsible for seeing massive investors outflows from another popular inflation hedge gold.

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gold, Gold fast losing the battle to Bitcoin

The precious metal is losing its safe-haven status to Bitcoin, the relatively new digital asset, as it settled at its lowest price level since December 14, 2020.

What you should know: Gold spot prices closed at $1,849, printing losses of 3.39% at its last trading session.

READ: Crypto market breaks past $1 trillion for the 1st time in history

The recent surge in the U.S. Dollar Index is weighing on gold prices, not forgetting Bitcoin that has attracted recorded inflows as it hits a new record high, is more likely stealing some of the global investors’ buying interest that would have in the past been directed to gold and other precious metals.

READ: Bitcoin on a grand slam win, trading at $41,200

Specta
  • The world’s flagship crypto, Bitcoin impressive gains partly responsible for seeing massive investors outflows from another popular inflation hedge gold.
  • The safe-haven asset had been in the past been surging with Bitcoin, which is up over 40% from $28,000 sighted last week.

READ: Crypto company, Paxos seeks approval to be a U.S National Bank

The bearish macro of very little risk aversion in the marketplace at present is “working against gold amid massive gains seen in global stocks

In a recent tweet seen by Nairametrics, Charlie Morris, founder, and CIO at ByteTree Asset Management said that the price correction in the yellow metal might be attributable to investors moving to Bitcoin;

  • “With bond yields up and inflation expectations down today, gold has taken a hit. This justifies a $50 sell-off, but the price is down to $120. I’d attribute the excess to flows moving towards Bitcoin.”

READ: Unknown identity moves $117 million worth of Ethereum

READ: Nigeria’s inflation rate to moderate by first half of next year

However, a highly revered gold investor, Petter Schiff kept his hopes on the bullion asset, based on the prevailing narrative that the global economy wasn’t out of the woods yet;

  • “Recent weak economic data on jobs is causing investors to buy risk assets and sell safe-havens like #gold. The weaker the economy gets the more money the Fed prints to prop it up. So, the real risk is inflation, and once investors understand this, they will seek safety in gold.”

READ: Higher demand for nurses and other medical staff as UK job market strengthens

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Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina or email [email protected] He is a Member of the Chartered Financial Analyst Society.

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Commodities

Gold traders remain cautious despite urgency in $1.9 trillion stimulus plan

Gold traders are of the bias that the precious market is heading from neutral to bearish…

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gold, Gold fast losing the battle to Bitcoin

Gold prices at Tuesday’s trading session moved slightly higher, despite the White House’s recent statement that there’s an “urgency” to passing the $1.9 trillion stimulus plan.

What you should know: At press time, gold futures were trading at around $1860/ounce.

Gold bug’s upside this week seems to be curbed in spite of its surge last week when it rose more than $26, or 1.4%, after losing almost 3.5% in two previous weeks combined.

  • Gold traders are of the bias that the precious metal’s market is heading from neutral to bearish as recent price action reveal the potential head and shoulders chart pattern continues to form on the daily charts, and energy is building during consolidation.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke in detail on macros that could put gold prices upside limited at least for the near term:

“Gold conceded ground to stronger dollar overnight but remains bid against escalating US-China tensions over Taiwan. Gold is struggling to break out. Most short-term fundamentals suggest upside from here, but extended speculative positioning is acting as a drag.

Specta

“We will see what progress is made on the US USD1.9 trillion fiscal stimulus package during the remainder of the week. Presumably, the smoother it passes, the more favorable for gold.”

What to expect: On the central bank front, the highlight is the FOMC decision. The FOMC meeting should be gold supportive, but not new news. Robust GDP data could weigh on gold if yields react higher.

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Commodities

Oil prices fall under pressure over rising number of COVID-19 cases in China

Brent crude was down by 0.24% to trade at $55.12 barrel, and WTI futures inched down by 0.10% to $52.22 a barrel.

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Crude Oil worker, OPEC, oil prices, Bulls hit back to support US crude oil amid panic sell- offs in global equity markets, Nigeria’s local oil players smashed by low crude oil prices

Oil prices drifted lower at the first trading session in London, recording a second consecutive trading session of losses, as the ever-rising number of COVID-19 cases, particularly in China, raise energy demand fears.

What you should know: At the time of writing this report, Brent crude was down by 0.24% to trade at $55.12 barrel, and West Texas Intermediate futures inched down by 0.10% to $52.22 a barrel.

China’s National Health Commission revealed that the world’s largest importer of oil recorded 124 cases on Jan. 24, up from 80 earlier, which is the worst wave of new COVID-19 infections seen since March 2020.

READ: COVID-19 mutant strain causes chaos at Oil markets

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on current fundamentals weighing on oil prices, at least for the near term. In addition, he spoke on how the COVID-19 pandemic seemed to distort the bullish rally.

Specta

“The Lunar New Year headline heebie-jeebies did a number on oil prices into weeks end. Yet after hitting an intraday low US$54.48 per barrel, Brent crude managed to close above US$55 despite the clear demand impacts of lockdowns in Europe and additional measures in China.

READ: Oil traders weigh if COVID-19 support programs will buoy economic growth

The enormous question mark remains around demand and supply.

  • The street uniformly downgraded Q1 21 market in the world ex-China due to clear demand impacts of lockdowns in Europe to start the year. But last week it was back to the downward demand revision drawing board.
  • More worryingly, however, since Asia has been the backbone of physical crude oil demand, this time it was to down-ballot China consumption as lockdowns spread in the country just weeks ahead of the Lunar New Year travel surge.”

READ: Young Nigerians share their experiences on the cost of working from home

What to expect: Still, the one million barrels per day of additional Saudi curbs over February and March should alleviate the currently projected level of attrition in global demand recovery without much impact on the path of OECD inventory draws.

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Commodities

Oil prices drop amid fears on energy demand softening

West Texas Intermediate, lost 1.6%, at $52.27 per barrel. It was WTI’s worst daily plunge slide since last Friday when it fell 2.2%.

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Crude oil prices slump, as partial lockdowns resume

Oil prices fell their most in a week after the first U.S. crude build in six weeks on the fear that the world’s largest economy might distort energy demand/supply rebalancing.

What you must know: U.S based oil contract, West Texas Intermediate, lost 1.6%, at $52.27 per barrel. It was WTI’s worst daily plunge since last Friday when it fell 2.2%.

READ: Non-oil sector is critical to Nigeria’s economic recovery in 2021 – Cordros Capital

  • But for the week itself, the U.S. crude contract lost about 0.2%.
  • British based Brent, the global benchmark for crude, settled  1.4%, at $56.10.
  • The gain in crude oil inventories coincided with President Joe Biden’s recent statements calling on its citizens for tough days ahead from the Covid-19, which could kill up to about half a million Americans.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave valid insights on the effect COVID-19 and other macros have on oil prices.

READ: FIRS hits 98% of target as it collects N4.95 trillion for 2020 fiscal year

Specta

“Oil prices look a tad vulnerable to potential profit-taking after US crude stockpile bearishly rose 2.56 million against consensus draw. Simultaneously, the near-term China crude demand forecast looks high and susceptible to revision lower as lockdown spread in the country ahead of the Lunar New Year

.“While oil traders see through longer lockdowns on the premise that vaccinations will quickly lead us out of the pandemic, COVID mobility clampdowns still hurt the very near-term view.

READ: Bitcoin, Gold, leading Stocks tumble on strong U.S dollar

“And since calls for a commodity supercycle have been many after the November vaccine turnaround, open interest in Brent and WTI has increased hugely, suggesting that the market remains very susceptible to any potential bearish headlines big or small, from a positioning perspective alone.”

What to expect: OPEC production at the moment remains well below the level required to meet anticipated demand. It should continue to drive a reduction in oil inventories as the global economy gradually recovers.

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