Oil slips on fears of demand, gold battles, bitcoin tanks on a possible double spending story

Raw is open to Chinese demand

Raw prices cannot shake growing concerns that demand forecasts could hit big in the short term if China experiences a debilitating wave of new coronavirus outbreaks. COVID vaccine distributions continue to skyrocket as states cannot wait for the federal government to get the vaccine sorted. Michigan and New York have reached out to Pfizer for extra doses and until the smooth distribution of vaccines should cap the recent surge in oil prices.

Energy traders are also waiting patiently until tomorrow for the EIA crude oil inventory report. Yesterday, API data showed an unexpected increase in stockpiles of 2.56 million barrels last week, which could mark the first build since early December if confirmed by the EIA report. The EIA is expected to show that crude oil inventories have fallen by 1.7 million barrels, less than the 3.25 million raffle seen last week.

WTI crude seems to be about to hover just above the USD50 level unless we see more lock outs coming out of Asia.

Gold falls on strong US data

Gold seems to need declining economic data to continue to climb higher. Gold prices turned negative after impressive housing data began, Philly Fed’s forecast rose to its best level since the start of the pandemic, and as initial unemployment claims continue to rise. Gold traders appear to be focusing on Philly Fed’s business prospects, which had such optimism that it eased forecasts that the Biden administration will no longer need to do so after law-makers have completed the next round of leverage.

Gold is also losing some momentum as some moderate Republicans throw some cold water on President Biden’s proposed USD1.9 trillion COVID stimulus plan. A long debate over what constitutes an acceptable figure of impetus will probably see some Republicans gesturing for a much lower relief plan. Stimulation will occur; the uncertainty of how much and when it will be wrapped could hamper bullish calls for gold in the short term.

Gold is still attractive but that could change if prices can’t rally as the dollar continues to weaken. Gold should see strong support ahead of the USD1,950 level.

Bitcoin is taking a dive

One of the big problems for bitcoin is that there is no head of bitcoin that can address any structural issues with their technology, unless Satoshi Nakamoto, the supposed creator of bitcoin, comes out in the open. Bitcoin prices fell about 10% last night after BitMex Research reported a potential double-spend transaction worth about USD21. This is not the first double transaction that has raised alarms for the crypto-space but it is a reminder as transactions grow and as systems are updated, weaknesses in double spending will occur.

While today’s sales are significant, it’s no accident, as one of the saving grace for the cryptoverse is that blockchain requires more than one confirmation, possibly six for securing a transaction. Some bitcoin-related services require three confirmation blocks to release funds, but what happened overnight appeared to be a one-block bug. Confidence in cryptos will be very popular, but infiltration on the blockchain does not appear to have occurred.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. The authors are opinions; not necessarily the OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Stimulated trading is high risk and not suitable for everyone. You could lose all the money you deposited.

Ed Moya

With more than 20 years of trading experience, Ed Moya is a market analyst with OANDA, producing up-to-date basic analysis of geopolitical events and monetary policies worldwide. During his career, he has worked with some of the world’s leading forex converters and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC and Bloomberg, and is frequently cited in leading publications including the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University.

Ed Moya

Ed Moya