Gold prices edge higher, bitcoin recovers

Gold edges higher despite USD gains

Gold is managing to squeeze out small gains today despite the dollar also edging higher on the day. The yellow metal remains stuck around its recent lows though, following last week’s plunge which doesn’t bode well for the near-term outlook unless the Fed can be successful in convincing investors that bond-buying at interest rates will remain at least at current levels for a sustained period of time.

As we can see with US yields now, doubts are growing about that, particularly against the backdrop of Joe Biden’s ambitious stimulus plans. Especially when many policymakers are so optimistic about the outlook already as a result of the economic resiliency shown this year.

Gold is seeing some support over the last week or so around USD1,820, where it did back in mid-December, but this level continues to look vulnerable. A retest of the late November lows may be on the cards, should Powell et al fail to convince in the coming weeks.

Bitcoin recovers from blip earlier in the week

Bitcoin is continuing to recover from its plunge earlier this week and is already closing in on USD40,000 once again. It should come as no surprise to anyone that bitcoin has bounced back so quickly. We know it’s an extremely volatile instrument; the only difference this time is the absolute numbers are now much larger due to its growth over the last month.

The moves earlier this week were not the bubble bursting; it was barely a correction by bitcoin’s own standards. It was a reminder of the downside risks in the space. There will be plenty more bad days ahead but as we’re seeing now, bitcoin bulls are not deterred and we could see more significant gains in the very near future. We could see an interesting psychological test around USD50,000 which, the way this now moves, may not be far away.

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

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.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam