In this article, we have covered the highlights of global market news about the Gold Price, AUD/USD, Bitcoin and Peso.
Gold Price Prediction: Turning or Burning as Bears Drive to 1700
This week’s decline in gold prices brought the loss from last month’s peak to -10%. (-9.96 percent, to be exact). Just before that move became apparent, I looked into a bearish reversal scenario, and a month later, bears are still firmly in charge of market activity.
Before reaching resistance in 1880 in June, gold prices had developed a rising wedge shape. It’s common to practice approaching the rising wedge in search of bearish reversals, and that’s precisely what started to emerge towards the middle of last month. And now, a month later, there is still very much evidence as sellers have driven prices down to test the psychological level of 1700, which has helped maintain support until the conclusion of the week.
The AUD/USD rate has rebounded and is vulnerable to the RBA’s policy path.
The recent decline in the exchange rate does not cause the Relative Strength Index (RSI) to enter the oversold territory, suggesting that AUD/USD is about to reverse ahead of June 2020 (0.6648). Still, the recent increase in the Aussie Dollar may be a correction in the more significant trend as the Federal Reserve normalizes monetary policy before the Australian Reserve Bank.
Since “inflation is forecast to peak later this year,” it appears that the RBA will continue to withdraw monetary support in this manner. Additionally, the minutes from the July meeting may encourage rumors of a second 50 bp rate increase in August because “the Board expects to take further steps in the process of normalizing monetary conditions in Australia over the months ahead.”
The Federal Open Market Committee (FOMC) is on track to deliver a 75bp rate hike later this month, so more of the same from Governor Philip Lowe and Co. may not do much to support the AUD/USD. Still, a change in the RBA’s forward guidance for monetary policy may result in a bullish reaction in the Australian Dollar if the central bank intensifies its fight against inflation.
After another big week for USD, Bitcoin’s (BTC/USD) resilience holds.
After US CPI (Consumer Price Index) statistics for June again exceeded expectations and hit a four-decade high of 9.1 percent, recession chances are still high (YoY). The current geopolitical environment is not favorable for speculative assets since market players have already priced in a Fed rate rise of at least 75 (and maybe 100) basis points later this month.
Despite this, Bitcoin prices dropped significantly after the publication of the US CPI print for May, and the downward trend continued throughout the month. However, after this week’s publication, Bitcoin prices doubled until bulls could lift price movement back over the key $20,000 mark.
Chile’s central bank will intervene in the currency market after the Peso’s depreciation.
The peso gained strength on Friday as Chile’s central bank announced a $25 billion intervention in the foreign exchange market to bolster it after it hit a record low.
The bank said in a statement late on Thursday that the past few days had seen an abnormally high intensity and volatility of peso depreciation.
The peso fell 3.7 percent on the day, reaching a new low of 1,045.80 to the Dollar on Thursday. The bank said that the significant worldwide rise of the US dollar since June, the decline in the price of copper, Chile’s primary export, and “local uncertainty” led it to decide to interfere.
The peso gained after the decision and finished Friday afternoon up 7.8 percent.
Alberto Ramos, a Goldman Sachs economist, remarked, “This is a good move, especially if accompanied with a forceful conventional monetary policy plan.”
But given the challenging internal and international environment and the small number of foreign currency reserves, there are limitations to what the central bank can do.
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