Gold Grows for the Fifth Consecutive Day
Gold (XAU/USD) grew by 0.73% on Thursday as investors turned to safe-haven assets amid increasing geopolitical risks.
Earlier this week, Ukraine launched its second missile, supplied by Western countries, towards Russia. At the same time, Kyiv's air force reported that Russia had fired a mid-range intercontinental ballistic missile—Oreshnik—in retaliation. These developments escalated the conflict to a new level and increased the appeal of safe-haven assets like gold.
Meanwhile, US data showed that initial weekly jobless claims had unexpectedly dropped to a seven-month low. The report also indicated some slack, as it took longer for unemployed people to find new jobs. This gives the Federal Reserve (Fed) room to consider cutting rates again in December. Recently, there's been some uncertainty about when the Fed might cut interest rates. Now, the CME FedWatch tool shows markets are pricing in a 57.8% chance of a 25-basis-point (bps) rate cut at the December meeting. Also, traders are taking into account the comments of the head of the Chicago Fed that rates might go down ‘fairly significantly’. If the central bank decreases the base rate, it will lower the opportunity cost of owning gold and push XAU/USD higher.
XAU/USD continued the upward trend during Asian and early European trading hours. Today, the US S&P Global Composite Flash report comes out at 2:45 p.m. UTC. Stronger data may trigger a correction in gold, while soft results will provide extra support to the precious metal. According to Reuters analyst, Wang Tao, ‘Spot gold may test resistance at $2,695 per ounce, a break above which could open the way towards $2,732’.
The Euro Dips Further on Positive US Job Data
The euro (EUR/USD) lost 0.66% against the US dollar (USD) on Thursday as the US Dollar Index (DXY) hit a 13-month high following the release of better-than-expected Jobless Claims report.
The DXY is trading near the upper border of its two-year range, and it's unlikely to move higher without a new fundamental impulse. Therefore, EUR/USD bears should be very careful as the risk of a strong technical rebound upwards is possible. ‘We're just going to kind of chop around; there's a lot embedded in the dollar price at current levels, so I definitely wouldn't be chasing it’, said Brad Bechtel, global head of FX at Jefferies in New York. The market appears to have already overpriced the risks associated with US President-elect Donald Trump's policies and rising inflation. Looking forward, expectations-driven markets can easily correct even if initial expectations begin to materialise.
EUR/USD was falling during the Asian and early European trading sessions. Today, S&P Global Market Intelligence will release its highly anticipated Purchasing Managers' Indices (PMIs). PMIs will be published for several key industrialised economies: Germany, France, the US, and the eurozone. The most important report is the US Composite PMI, due at 2:45 p.m. UTC. However, German and eurozone reports at 8:30 a.m. and 9:00 a.m. UTC may also add substantial volatility. If European PMIs are weaker than expected, EUR/USD may break below 1.04470 and head lower. Conversely, better-than-expected results may trigger a rebound towards 1.05220.
Bitcoin Is Approaching the $100,000 Level
Yesterday, Bitcoin (BTC/USD) rose sharply by 4.29%, reaching an all-time high of $99,000. Today, the upward trend continued in the Asia session, with the price approaching the psychological level of $100,000.
The recent victory of Donald Trump in the US presidential election has significantly boosted the appeal of Bitcoin. Previously, Trump had been known for his scepticism towards cryptocurrencies, but he has since changed his stance. He pledged to turn the US into a global hub for blockchain technology and digital assets. His administration has outlined potential policies that could benefit the crypto industry, including tax incentives, clearer regulations, and the potential creation of a US strategic Bitcoin reserve.
Institutional investors, such as hedge funds and asset management companies, are increasing their bitcoin reserves. This positive development indicates growing confidence in the cryptocurrency. Experts have revised their price forecasts, with some predicting that bitcoin could reach $120,000 by early 2025. The recent increase in BTC value has coincided with a halving event—a pre-determined reduction in the rewards paid to miners for verifying transactions. Halvings occur approximately every four years, reducing the rate at which new Bitcoins enter circulation. This decreases the number of newly created BTC, potentially leading to further price appreciation.
Considering all factors, Bitcoin may reach $100,000 in the near future. If the price breaks through this psychological barrier and continues to rise, we may see it reaching $120,000 or higher. Still, a correction from the current level towards around $90,000 is also possible.