Gold Vulnerable To More Pain, Bitcoin Nears $30k

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Stock selloff resumes, Crude prices tumble, Gold vulnerable to more pain, Bitcoin nears $30k – OANDA

Wall Street remains uninspired to ‘buy the dip’ as inflation seems poised to remain stubbornly high, which will force the Fed to tighten policy to levels that will jeopardize the soft landing most traders were expecting. ​ No one can confidently answer the question of when stocks will hit the bottom, but if the options market is the primary focal point for many traders, that could suggest downward pressure on stocks could last a while longer.

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Too many investors are in risk-off mode and targeting a deep bear market for tech stocks. The problem for tech stocks is that a lot of companies will struggle with rising costs as they pay their employees with equity. ​

Stocks extended declines after the NY Fed survey showed longer-term inflation expectations jumped, prompting fears of weaker growth that likely lead to a recession. The inflation expectations from three years from now increased from 3.7% 3.9%. ​ The one-year inflation expectation fell from 6.6% to 6.3%. ​ ​

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Oil prices are dropping fast as crude demand destruction fears grow given China’s COVID situation and the de-risking event happening with US stocks. An imminent embargo with Russian energy seems unlikely as the EU continues to work on gaining Hungary’s approval. ​ A firm dollar has also been dragging down commodities, especially oil prices.

An important story by Javier Blas was circulating today (Thank you Julia Fanzeres for sharing), bringing much needed attention to the recent surge with refined oil products. ​ Everything is getting a lot more expensive and that is leading to crude demand destruction fears. Energy stocks are getting hit the hardest today as everyone is now paying attention to refining margins. ​ ​


Gold prices are under pressure as investors are dumping stocks and running to the dollar and not bullion. Gold’s worst enemy is the bond market and right now the outlook for Fed policy suggests surging yields will make this a difficult environment for non-interest bearing gold. ​

If the carnage on Wall Street does not improve, eventually gold will start to see some safe-haven flows, but that isn’t happening just yet. ​ Leading up to Wednesday’s inflation report, the move in the dollar should show some signs of exhaustion and that could provide some relief for gold prices. ​

Gold still looks vulnerable here and if selling pressure sends prices below the $1835 level, it could even uglier. If the dollar hits a short-term top, gold could stabilize here but should find strong resistance around the $1920 level. ​ ​


Bitcoin is breaking below some key technical levels as the never-ending selloff on Wall Street continues. ​ The institutional investor is paying close attention to Bitcoin as many who got in last year are now losing money on their investment. ​ If the $30,000 level breaks, that could trigger a flash crash environment if several whales unload. ​

Bitcoin’s long-term fundamentals have not changed in months, but growth/recession concerns have made this a very difficult environment for cryptos. ​ No one is looking to buy the crypto dip just yet and that leaves Bitcoin vulnerable here. ​

Article By Edward Moya, OANDA