A timid start to the week so far. The strong rallies we saw in gold and oil last Friday did not keep their momentum on Monday and Tuesday. Currencies undecided. Stocks directionless.
Perhaps the most interesting price action we’ve seen so far this week was in the crypto markets. Bitcoin briefly spiked up to $30,000 and even beyond on some exchanges on Monday before quickly coming back down to the $28k range. The short-lived move was sparked by news that BlackRock, Fidelity and Invesco submitted applications to sell ETFs tied to Bitcoin holdings.
In light of potential escalation in the Middle East, there have been talks of easing sanctions on the Venezuelan regime. The proposition entails opening up next year’s election to international scrutiny; in exchange, Venezuela’s economy would be allowed back on the international stage, providing supply-side relief to oil markets.
There appears to be somewhat of a balancing act in the gold market. On the one hand, the typical flows into safe-haven assets are to be expected if geo-political concerns are not assuaged. On the other, a strong dollar and high treasury yields make gold less appealing than it otherwise would be. Traders will be looking towards the Fed for any clues regarding interest rate decreases in the medium-term. Such an intervention could well be the catalyst to tip the scales, one way or another.
