Although the gold price reversed its intraday decline on Wednesday, it could not continue. Economic woes and worsening US-China relations are benefiting the safe-haven metal. Modest strength in the dollar could limit gains, according to analyst Haresh Menghani. Crypto analyst Akash Girimath notes that Bitcoin has been trading in a narrow range for about two weeks. Bitcoin and gold investors will keep an eye on the FOMC meeting minutes, which will be announced today at 21:00 CET.
US-China ties reduce appetite for riskier assets
Gold price saw some dip around $1,920. Thus, it rose to the upper limit of the intraday trading range in the early hours of the European session. However, gold remained below the weekly high it reached on Tuesday. It is currently trading around $1,927-1,928, up less than 0.15% on the day.
Disappointing Chinese macro data and worsening US-China relations are reducing investors’ appetite for riskier assets. This becomes an important factor that benefits the safe-haven gold price. Caixin/S&P Global Services PMI fell to 53.9 last month from 57.1 in May. Thus, it took its lowest value since January. China has imposed export restrictions to the United States on two metals commonly used in the semiconductors, electric vehicles and high-tech industries. This signals a potential escalation in the trade conflict between the world’s largest economies. So it is possible that it will cause further disruption to global trade. This is likely to further weaken the already weak economic conditions.
Gold stays flat, eyes on FOMC minutes
However, major central banks, including the Fed, have taken a more hawkish stance. After this, the rise of the gold price is likely to be limited. As a matter of fact, the Fed signaled in June that it may need to raise rates by another 50 bps until the end of this year. Moreover, markets are pricing in a higher probability of a 25 bps increase at the next FOMC monetary policy meeting on July 25-26. This is also acting as a tailwind for the US Dollar. It also contributes to blocking a meaningful rise for the non-yielding yellow metal. So it requires some caution for bullish traders.
Meanwhile, there is uncertainty regarding the USD, the Fed’s future rate hike path. Therefore, the yellow metal lacks belief in ascension. It’s worth remembering that Friday’s lower US PCE Price Index and Monday’s weaker US ISM PMI raise questions about how much headroom there is to continue the Fed’s cycle of tightening monetary policy. Therefore, the market’s focus will be on the June FOMC meeting minutes, which will be released later in the US session. Investors will scrutinize the minutes closely for clues to the Fed’s near-term policy outlook. This, in turn, will play an important role in influencing USD price dynamics. Thus, it will help determine the near-term trajectory for gold.
Bitcoin price needs to reset
Bitcoin price is showing a clear Wyckoff scatter pattern formed on the two-hour chart. The setup has a few unique parts; The local peak formed on June 21 is Primary Supply (PS) where the sale took place. After the initial supply was formed, the bulls pushed the Bitcoin price to form a Buying Peak (BC). As investors split their profits following this rally, it led to a pullback that created Auto-Response (AR).
An unsuccessful attempt to another rally leads to a Secondary Test (ST) formation. Similarly, a failed sale now generates a Sign of Weakness (SOW). The next phase is a classic sign that the early bulls are being manipulated or trapped due to the Bullish (UT) above the buying peak. This phase is followed by UTAD (Post Distribution Ascension), two places where smart money disposes of its assets. Hence, after UTAD, the asset undergoes a steep correction.
cryptocoin.comAs you follow, Bitcoin price is trading around $ 30,822. That’s why investors need to be aware of two scenarios. A sudden sell off from the current position or a correction after the $31,500 high. Either way, the target for the bears is $28,138, the midpoint of the 27% rise seen June 15-23. In some cases, the drop could push Bitcoin price to label the 62% retracement level at $27,331 or the 70% retracement level at $26,760. In total, investors can expect BTC to drop between 8.66% and 15% in the coming days.
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