Gold Renews All-Time Maximums
Gold (XAU/USD) gained 0.71% on Thursday, reaching record highs as expectations for a more accommodative monetary policy from major central banks and a slight decrease in US bond yields supported demand for non-yielding bullion.
According to market expectations, the Federal Reserve (Fed) will likely cut interest rates at the two remaining meetings this year. A 25-basis-point (bps) reduction in the federal funds rate in November is becoming increasingly probable, with a 90.2% chance for a rate cut, according to the CME FedWatch Tool. Meanwhile, the European Central Bank (ECB) announced a 25-bps cut on Thursday, and declining U.K. inflation points to a potential rate reduction by the Bank of England (BOE) next month. Also, several major Asian central banks have recently lowered their interest rates. These and other factors support gold prices, including uncertainties surrounding the upcoming US presidential election and heightened tensions in the Middle East following Israel's intensified air strikes against Lebanon on Wednesday.
Additionally, renewed economic pessimism in China is driving investors towards safe-haven assets. On Wednesday, Hong Kong officials announced plans to develop the region as a gold trading hub. Gold has become increasingly popular among developing economies looking to diversify their foreign reserves. This trend can be seen through the significant build-up of gold reserves by countries such as China, Russia, and Turkey over the past few years. With the BRICS Summit beginning next week, hosted by Russia, de-dollarisation is expected to be a key topic of discussion.
XAU/USD continued its bullish trend during Asian and European trading hours. The pair renewed absolute maximums and is trading above the key resistance level of $2,700. No major events are expected today, but the US Building Permits report at 12:30 p.m. UTC may influence the pair. Gold is in its Elliot 5 wave formation, in the fifth wave. According to Reuters analyst Wang Tao, spot gold may surge into a range of $2,726 to $2,741 per ounce, driven by a powerful wave five.
China's Economic Data Offers Temporary Relief for Euro
On Thursday, the euro (EUR/USD) lost 0.28% against the US dollar (USD) after better-than-expected US Retail Sales and Jobless Claims reports pulled the greenback towards a fresh two-month high. An interest rate cut by the European Central Bank (ECB) also added bearish pressure on EUR/USD.
The US Dollar Index (DXY) has now approached a 200-day moving average. If it breaks above this level, it could quickly rise towards 105.000, causing other currencies to decline further. There is a good chance that the DXY may continue rising as US macroeconomic data has been improving lately, forcing investors to expect fewer rate cuts by the Federal Reserve (Fed). US core retail sales jumped by 0.5% in September, above an expected 0.1% increase. Additionally, US weekly unemployment claims were at just 241,000, below the anticipated 260,000. Given these upbeat statistics, the market is now pricing in less than four 25-basis-point (bps) rate cuts by the Fed over the next seven months.
Meanwhile, the ECB appears to be taking a more assertive stance on monetary policy easing. Although yesterday's rate cut by the ECB was entirely expected, the post-meeting statement contained plenty of dovish details. Policymakers noted that inflation in the eurozone was increasingly under control while the outlook for the bloc's economy was worsening fast. Christine Lagarde, ECB President, didn't provide hints about the future interest rate path, but four sources close to the matter told Reuters that another rate cut in December is likely unless economic or inflation data turns around in the coming weeks.
EUR/USD was rising slightly during the Asian and early European trading sessions. Earlier today, China unveiled several reports suggesting a positive economic outlook. The data revealed a surge in industrial output and a better-than-expected rise in retail sales. As China is the eurozone's key importer, the data managed to push the euro up a little. No major events are scheduled for today, but the US building permits data at 12:30 p.m. UTC, and the speech by FOMC Member Christopher Waller at 4:10 p.m. UTC may affect USD and related pairs. Fundamentally, EUR/USD remains in a bearish trend, and traders are generally advised to sell the rallies.
Bitcoin Holds Above $66,800, Sparking Investors Excitement
Bitcoin (BTC/USD) remained steady above the $66,800 level on Thursday, sparking excitement among investors.
Bitcoin ETFs have seen significant buying activity over the past four days, signaling strong institutional demand, which could push Bitcoin toward new all-time highs. In just the last four trading days, inflows totaled $1.639 billion, marking one of the most successful weeks since Bitcoin ETFs were introduced, according to sosovalue.com. This surge suggests growing confidence among traditional investors in Bitcoin's future, driving increased demand and lifting its price.
The coming days are crucial for Bitcoin's trajectory, as traders and investors anticipate a potential breakout to historic highs. With BTC approaching closer to these levels, upcoming price movements could be pivotal in determining BTC's direction. While optimism runs high, some market observers remain cautious. Historically, heightened excitement and euphoria are often followed by price retracements or consolidation. Bitcoin tends to form local tops when sentiment peaks, indicating a cooling-off period before the next significant move. Investors are closely monitoring for signs of a possible pullback or whether Bitcoin will continue its climb toward new all-time highs in the coming weeks.
BTC/USD declined slightly during the Asian trading hours. Bitcoin has been in a strong uptrend since early September, leading the market. For bullish momentum to persist, Bitcoin must hold above $66,000. If the currency manages to stay above the level, the price could soon advance towards new highs. Investors and traders should monitor BTC ETF inflows and outflows to stay informed and keep a pulse on the market.