- Volatility across most markets remains low as both the US and Canadian markets are not trading due to bank holidays.
- The price of Gold trades higher, continuing the bullish trend from Thursday and Friday. However, will investors continue to purchase gold while inflation continues to remain sticky?
- The US Dollar remains unchanged but is struggling to maintain bullish momentum after Friday’s producer inflation data.
- Bitcoin rises 1.30% and continues to test the previous resistance level. However, the overall cryptocurrency market capitalization and Bitcoin’s market share falls.
Bitcoin
The price of Bitcoin is trading slightly higher on Monday and is not showing any major bearish momentum or indications. The cryptocurrency has risen in value for 4 consecutive weeks and will be in the spotlight over the next 24 hours as China confirms their monetary policy. Analysts expect the 1-Yr Loan Rate to remain unchanged but for the 5-Yr to fall 10 basis points. The bullish price movement for Bitcoin has been largely due to the weakening Chinese policy and further dovishness can support Bitcoin further.
According to the latest reports from economists and researchers, the asset has seen an increase in activity from institutional investors. According to experts at the analytical company CoinShares, over the past week, the net fund inflow into the new exchange-traded instruments amounted to $1.1 Billion, which is considerably high. On Wednesday, spot Bitcoin ETF inflow reached $651 million, the second highest since the start of the project.
The upcoming halving also provides support for prices as mining companies begin to hold onto mined tokens, creating a supply shortage in the market. Furthermore, when looking at technical analysis, the price also continues to maintain medium-longer term buy signals. The asset trades above the 75-bar EMA, above the VWAP and above the neutral on the RSI. However, if the asset is going to decline, indicators point to a retracement declining to $50,260.
XAUUSD
The price of Gold has risen in value primarily due to the decline in the Dollar, but analysts continue to advise the Dollar can rise due to inflation. Trading today has been limited due to the bank holiday, but the Dollar has maintained its value. Investors will be eager to see how the Dollar reacts tomorrow as more orders are entered.
The producer price index increased by 0.3% and by 0.9% over 12-months, which was higher than the predicted 0.1% and 0.6%. The figures were also significantly higher than the previous month which was a concern. The core indicator for the same period accelerated by 0.5% (monthly) and 2.0% (yearly), exceeding estimates. Now both consumer and producer inflation are higher than previous expectations. The only other inflation release due is the PCE Core Price Index next Thursday. If the PCE Price Index is higher than expectations, investors will most definitely push back a cut to the summer months.
The PCE Core Price Index is believed by most investors to be the most monitored by the Fed alongside the Consumer Inflation Rate. So far this week, the Dollar potentially may continue to witness support from the higher inflation readings. This week, the Dollar will be influenced by the PMI on Thursday and Wednesday’s FOMC Meeting Minutes. If the PMI is higher than expectations, and the Meeting Minutes are generally hawkish, Gold may see another decline.
When looking at the medium-term charts, such as the two hour and three-hour charts, XAUUSD may see sell signals materialize if the price falls below $2,011.
On a last note, last week, buyers opened 5,547,000 positions in the asset, while sellers reduced their positions by 21,370,000.
Michalis Efthymiou
Market Analyst
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