Gold and BTC Can See These Numbers!

September 2022 Fed rate decision will be announced at 21:00. Fed Chairman Jerome Powell will make statements about the next period after announcing the decision. This decision came in line with market expectations. Analysts warn of a drop for gold and BTC.

FED interest rate decision: Critical hours for gold and BTC

Some analysts fear $1,600 an ounce is in the cards as the Fed remains hawkish despite some worrying economic signs. According to Chris Weston, Pepperstone’s head of research:

Thirteen central banks are meeting this week, and most are expected to raise rates aggressively, but this week’s marquee event, the FOMC meeting.

The reason why the gold price fell to $ 1,600 in the next step

According to analysts, it all depends on whether the Fed blinks in the face of growing recession concerns. One such sign is an “extreme (close to 50 basis points) reversal) in the US 2-10 Treasury curve,” said Chris Turner, ING’s head of global markets. That’s why the tone Powell chooses is so important. Edward Moya, senior analyst at OANDA, said:

Fed Chairman Powell’s message will most likely determine whether gold is crushed here. If Powell can convince markets that by tightening they will not only stay aggressive but hold rates steady even as the economic downturn worsens, gold will be in trouble.

Expectations of 75 basis points increase at the November meeting and 50 basis points at the December meeting put pressure on gold. In the short term, the risk for gold drops to $1,600 an ounce as demand for precious metals continues to decline. According to Daniel Hynes, senior commodity strategist at ANZ:

Despite rising geopolitical risks and worsening economic conditions, demand remains low. Technically, the downtrend is likely to continue. A break below $1,675 indicates that the price could drop to $1,600.

Edward Moya

Edward Moya added that the underlying volatility is not going anywhere:

Prices are likely to have a strong case for a move towards $1,600 or above the $1,700 level.

75 basis points uncertain

And most economists expect the Fed to raise rates by 75 basis points on Wednesday. However, there is still a 16% chance for a full percentage point increase, according to the CME FedWatch Tool. According to TD Securities commodity strategists:

While prices are certainly weak, the price action of precious metals may need to decline further as the restrictive rates regime lasts longer. Indeed, gold and silver prices tended to systematically underperform when markets expected in real terms. The Fed funds rate will rise above the neutral rate.

What to expect in a more aggressive Fed rate decision?

Another key element of the Fed’s monetary policy meeting will be the dot chart, which could reveal updated economic projections and new information about when the Fed’s walking cycle might stall or even end. On the economic front, analysts expect the Fed to lower its growth forecasts and raise inflation forecasts.

FOMC meeting on horizon after Fed rate decision

Bitcoin price is spending time above the critical support zone between $18,800 and $18,200. On the technical side, the 200-week MA is one of the key levels. Bitcoin has been rejected from this level for a while. Also, we’re likely to see an unusual death cross in the next few days that could bring the price down further.

As the chart shows, BTC price has not tested the 200-week MA more often in the recent past. While the price is busy marking the bottom of its bearish cycle, testing has only occurred a few times in history. In previous cases where the price hit the 200-week MA, it has recovered solidly and has risen by spectacular numbers.

Bitcoin price is witnessing its first death cross where the 20 and 200-week MA levels intersect. The 20-week MA has crossed the 200 MA and is heading south.

Since its start, the 20 MA levels have traded close to the 200 MA. But it never passed the levels. However, if Bitcoin price rebounds, the bearish formation will be invalidated. On the darker side, if the pattern is confirmed, it could push the price below $15,000. Even testing below $10,000 is threatening a major drop.

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