Gold price remains under pressure around seven-month low amid recession fears. The hawkish monetary policy of the US Federal Reserve and developments related to China are pressing gold. However, there is a development that gives hope to investors. Today, at 21:00 Turkey time, the minutes of the FED will be announced. So, how can the minutes affect gold and Bitcoin?
What will the Fed minutes mean for gold?
Gold slid its biggest drop in three weeks the previous day, while visiting its lowest levels since December 2021. However, the bears took a breather during the stagnant Asian session before extending their southward course. Gold’s recent weakness may be linked to headlines suggesting more hawkish moves from the Bank of England (BOE) and the European Central Bank (ECB) despite developments that China is ready to strengthen strategic coordination with Russia, analysts say.
Along the same lines, the market may be cautious ahead of the Federal Open Market Committee (FOMC) Minutes and the US ISM Services PMI for June. Previously, pessimism surrounding the global supply chain amid the escalation in the Russia-Ukraine conflict is being added to by fears of new COVID-induced quarantines in China. This puts pressure on gold prices. Developments such as the economic warnings of Germany and Italy also came to the fore.
In addition, macro pessimism intensified after the Bank of England (BOE) published a report describing the poor economic outlook. However, the US Dollar Index (DXY) remains stronger around its highest levels since 2002. Meanwhile, yields dampen the initial recovery and stock futures remain under pressure lately. To summarize, the gold price bears the brunt of economic pessimism. Stronger US dollar moves towards key data/events of the week.
Technical analysis and prospects for gold
Gold’s corrective retracement falls below the previous key support around $1,780-85, according to analyst Anil Panchal. This, in turn, joins a bearish MACD signal that marks the metal’s late-2020 lows near $1,753. However, with the oversold RSI (14) and traders’ concern ahead of important US data/events, XAU/USD could test the declines. On the downside otherwise, the analyst points to September and August 2021 lows. These are the lows around $1,721 and $1,677, respectively.
Meanwhile, the recovery seems to be moving beyond the resistance surrounding $1,785. If gold prices remain stronger above $1,818, the possibility of witnessing a rally towards the 61.8% Fibonacci retracement between December 2021 and March 2022, around $1,875, cannot be ruled out.
What effect is expected for Bitcoin?
It is not known exactly how the FED minutes will affect the market. However, it can be said that BTC, which is inversely correlated with gold in the current situation, may experience price changes according to the movement of the precious metal. So if gold goes up, BTC can go down. However, only time will tell how the markets will react to the Fed minutes. cryptocoin.com As we have also announced, the minutes will be announced at 21:00 Turkish time.
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