European and US futures are trading lower again today after a strong bounce-back yesterday. There is no doubt that currently, there is nothing more important for traders than the Delta variant. The danger here is that the Delta variant could derail the whole recovery as new cases are rising exponentially, and hospitals are becoming full while healthcare systems are coming under intense pressure once again. It’s also not wrong to say that we have seen evidence of some countries rolling back some of the coronavirus restrictions in some cities in Asia, and the fear is that if the situation doesn’t come under control, we could easily see coronavirus related restrictions implemented again. The main anxiety is not that these restrictions will be implemented again, but that the damage that they may create could have a detrimental influence on business and consumer confidence.
It is important not to blow the current situation out of proportion, which means that speculators have been using the Delta variant as an excuse to take push markets lower so that they can bag some bargains. If we look at yesterday’s trading session, it becomes clear how bargain hunters wasted no time in loading their portfolios with solid names without worrying about the Delta variant.
At the same time, something that is worrying about the Delta variant is that people who have received their double jabs are still being infected with this new variant of the virus. If the coronavirus vaccine’s double jabs continue to fail in protecting individuals against new mutants of coronavirus, then perhaps, the path to economic recovery may be longer than previously anticipated.
In terms of the precious metal, gold prices are unwilling to stay below the 1,800-price level as bulls are trying their best to win this battle. The dollar strength is the major story here, and traders believe that next week the Fed may be announcing some hawkish commentary about the future path of their monetary policy. But one important factor that traders need to pay attention to is that despite the fact that we could hear some hawkish commentary from the Fed, the gold price is quite away from its recent low of $1685, which is very encouraging for the bulls. The reason for this is that during the upcoming hawkish monetary policy period, gold prices may not see extensive an selloff like the one the gold price experienced back in 2012 when the Fed started to wind down their monetary policy.
Brent and Crude oil prices are trading somewhat more stable today after suffering heavy losses during the past few days. Most of the losses have occurred on the back of the OPEC supply increase agreement. But, at the same time, there is no doubt that oil prices went too far and too fast, and a big retracement was due. The fact is that the world is moving away from fossil fuel, and thinking of higher oil prices in the future may not be the best strategy, especially when in cities like London, combustion engines are massively discouraged and more than five cars out of ten do not have combustion engines.
Bitcoin prices are holding on to some strength despite the fact the price violated the 30K support mark yesterday. Remember, everyone has been looking at this support number religiously, and the fear in the market was that if Bitcoin breaks below the 30K mark, the price would move violently lower. But in reality, that is not what we have seen, the Bitcoin price has been stable, and we have not seen any panic selling. Having said that, it is still possible that the price may continue to move, and it may retest the 25K support price level in the coming weeks.