Gold consolidates, bitcoin could break

Gold continues to consolidate

Gold is continuing to consolidate today after once again seeing strong support close to USD1,800. Yesterday’s dip was quickly bought into around USD1,810, once again reaffirming the region as a key area of support. The yellow metal is now back in the middle of the range it has established over the last week or so.

The dollar is pulling back today which is helping to support gold. It’s been on a good run the last couple of weeks as yields rose in the aftermath of the Georgia run-off. Yields remain elevated but off their highs which is why we may be seeing a little profit-taking in the greenback and relief in gold.

The Fed has sought to ease concerns about inflation and what it means for bond-buying and interest rates and while it has been successful to a point, they haven’t pulled back that far. Should they continue to gradually move higher, it could be bullish for the dollar and problematic for gold, maybe seeing a bigger test of USD1,800 and USD1,760.

Bitcoin breakout coming?

Bitcoin has been quite steady over the last couple of weeks which may be more encouraging to backers than doubters. While the cryptocurrency thrives on hype, as we’ve so often seen, the limited correction we saw early last week – by its own standards – and the ability to stabilize since could be a positive development.

It has been in consolidation but a breakout may not be far away. A break higher at a time like this always looks more likely but it’s naturally difficult to say given what we’ve seen recently. Any breakout could be quite aggressive though so we should be prepared for a significant surge in volatility.

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