Gold falls below USD1800, bitcoin higher

Gold sell-off hitting interesting point

Gold continues to suffer in the post-vaccine world. The Pfizer announcement took the wind out of its sails last month just as it broke higher and was preparing a run at USD2,000. It’s been all downhill since then, despite the dollar not performing particularly well and US yields pulling back.

The break of USD1,850 was a massive psychological and technical blow. This was the late summer/early autumn lows and had been strongly supported on multiple occasions throughout that time. The loss of it was a blow and it’s still suffering the consequences, even as the dollar plunges to its lowest levels in two and a half years and yields ease off.

The combination, maybe, of stimulus expectations being pared back and better prospects for the economic recovery are weighing on the yellow metal. After months of being aligned with risk assets, we may also be seeing the re-alignment with other safe havens, which is proving a further drag. The next support is USD1,750-1,760, with USD1,700 below here being key. This represents a correction of between 50% and 61.8% of the whole pandemic move, so it will be an interesting test of gold’s bullish credentials over the medium term.

Bitcoin heading for rollercoaster end to the year

The bitcoin correction didn’t last long, with the cryptocurrency having sights set on new highs once again, with USD20,000 the ultimate goal in the short-term. A move into uncharted territory and the psychological boost that would come with a move like this could propel bitcoin aggressively higher. We’ve seen before what bitcoin can do once it develops a head of steam. Agree with the moves or not, I have no doubt it’s going to be a rollercoaster end to the year for cryptos.

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Former Craig

Former Craig

Former 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.