The value of Gold, accomplice to the setbacks of the dollar and the prices of Bitcoin and oil, is experiencing a golden moment that analysts say is destined to last long, aiming as high as $1,900.
The context that lays the groundwork and the vector that can change it
A bad day for the US stock market, which closes lower yesterday after there was some turbulence last week, the Dow Jones stops at 33536.70 points (-0.6%), the S&P 500 just below 4,000 at 3957.25 (-0.89%) and the Nasdaq follows the trend losing 1.1% at 11196.22.
According to many insiders and according to Fed Vice Chair Lael Brainard herself:
“the recent data on inflation have been reassuring it will probably be appropriate to slow down the pace of rate increases soon.”
This prepares the market for what is to come and in the meantime results in the 10-year rising to 3.865%.
As mentioned at the opening, gold is soaring to $1775.40 an ounce appreciating $6 from the previous reading and with a run that shows no sign of stopping.
According to some analysts, the recent loss of Bitcoin share indirectly influenced by the FTX fiasco has disaffected Sunday investors in favor of gold and this is only partly an explanation to the precious metal’s strength.
The euro also falls (down 0.23%) to $1.033 and Wti oil closes at $85.20 a barrel in the Nymex.
The summit between Biden and Xi yesterday and today may be the vector for a new or renewed direction for Gold and Bitcoin but in the meantime China’s policies of massive purchases of Oil certainly benefit the rest of the world as they paradoxically result in falling prices in a world veering increasingly electric.
The still tight pandemic response policy in the dragon limits the rush to the counters and allows China to overtake US sanctions on Russian oil with huge purchases of crude oil at rock-bottom prices (3 billion in savings between April and July 2022 alone) putting the country first in the world for imports (11.8 million barrels per day) just above the Americans who stand at 9.1 million barrels.
Gold value on the rise as Bitcoin price reckons with bear market low, oil follows
Against a backdrop where Oil is not in the game, the dollar is pulled down by the Fed’s view and the inflation figure, and Bitcoin reckons with yet another exchange failing, Gold has it easy, touching $1774.20 an ounce on Friday.
The weekly increase is even more impressive and touches $92.80, up 5.5% from the previous one recording the highest weekly increase since April 2020.
Gold has been accelerating since Thursday, when the US inflation figure brought relative serenity and placed doubt of a policy change by the Federal Reserve.
Meanwhile, cryptocurrencies face yet another hurricane that this time is not called Luna but FTX, which declares Chapter 11 and creates domino reactions throughout the environment bringing down even the price of digital gold, which falls 20% on the weekly by touching its lowest since the advent of this bear market US$15,500.
According to Head of Marketing Strategies at Blue Line Futures in Chicago Phillip Streible:
“There is no concrete data confirming fund flows from cryptocurrencies to gold, but I would be surprised if this weren’t happening. Normally the opposite occurs, as gold rarely finds love from the crypto crowd. But now the gold appears relatively safer than digital currencies and we imagine it has gained new respect, which could mean higher allocations could go to cryptocurrencies.”
According to many analysts, gold will reach $1,800, and part of its success is also due to disaffection from Bitcoin, which nevertheless paradoxically strengthens in the eyes of analysts who do not see any particular negative reaction of the most capitalized currency compared to previous bear markets-in fact, this time it has held up better.
“Gold bulls have been waiting a long time for this week – a week (or so) where the Fed signaled a potential slowdown in rate hikes and CPI data showed a broad-based, significant decline.”
SKCharting’s Dixit, expresses:
“We have seen several declines in spot gold since the first quarter, and each time $1,615 has come in to support the metal. Gold bulls seem to be saying ‘don’t take us for granted’ this time. The short-term bullish bounce is very It is likely to test the 1-month Middle Bollinger Band of $1,797 and the 200-day Simple Moving Average of $1,804, which is also the 100-week SMA. Whatever bearish pressure is falling on gold now, the short-term trend becomes bullish if traders interpret the pullback as a means to make value purchases. If gold manages to clear $1,805, the next targets will be $1,850 and $1,875.”
Meanwhile, Digital Gold re-enters above $16,000 in slight relief and Bitfinex confirms the paradox expressed earlier despite the fact that some last-minute investors are taking refuge in Gold and Bitcoin has suffered major headwinds:
“As the digital token industry reels amid frenzied selling pressure, the unique premise of Bitcoin as a truly decentralized form of digital cash will become even more apparent. While there will be much healing to be done following the apparent implosion of FTX, a supposed mainstay of the digital token industry, the reasons that led to the birth of Bitcoin are as clear and unflinching as ever.”