Gold higher on weaker dollar, bitcoin remains hot

Is gold’s correction over?

Gold’s bearish correction could be over now that prices are poised to have their first monthly gain since July.  Gold has made modest gains as the dollar takes another dive, but vaccine progress globally has stymied demand for safe-havens.  Despite the recent breakthroughs with COVID vaccines, the rollout has been disappointing, and the current wave appears will force more restrictive measures over the next several weeks.  Gold will shine in 2021 as economic disruption alongside a Biden administration should mean trillions of stimulus dollars are about to hit the economy.

Gold traders will closely watch the Georgia Senate runoff races that could deliver a surprise blue wave for the stimulus trade.  If Democrats Warnock and Ossoff can both win on January 5th, the prospects of additional stimulus will become a reality and send the dollar further into freefall and drive gold towards the mid-USD1900s.

 

Bitcoin mania – is the 30K level next to fall?

The week of Christmas is traditionally a quiet one for the financial markets, with investors and traders looking ahead to the New Year. However, the bitcoin rally is running full steam ahead in the frigid December air. Bitcoin mania is running wild as bearish bets against the dollar rise to the highest levels since 2011.  Macro crypto traders and haters of fiat currencies remain blindly ultra-bullish and that could help bitcoin test the USD30,000 level before the year ends.  In the past, bitcoin would see weakness on regulatory concerns, but prices seem resilient despite the latest problems with XRP, which at one point last week was the world’s third-largest crypto.  Coinbase, a cryptocurrency exchange, decided to suspend trading in XRP after the SEC sued Ripple for illegally selling unregistered securities worth USD1.3 billion.  Regulatory fears have always posed a risk for Bitcoin, but for some institutional investors, the price crash of XRP was a reminder that bitcoin is best positioned to handle new regulatory restrictions.

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

Ed Moya

Ed Moya

Senior Market Analyst - The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geopolitical events and monetary policies around the world. Over the course of his career, he has worked with some of the world’s leading forex brokerages 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 often quoted in leading publications including the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University.
Ed Moya