gold (XAU/U.S. dollar), Bitcoin (BTC/USD) analysis and charts
Gold forecast for Q1 2024:
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- Gold needs a driver – will US CPI help?
- Bitcoin – a confirmed breakout of $49,000 should quickly bring $52,000 back into play.
A quiet start to a busy week, even with most Asian markets closed for holidays. Chinese markets have been closed all week for the Lunar New Year, while Hong Kong, Taiwan and South Korea were also closed today. With little economic data on the calendar today, traders should pay attention to a handful of speeches from central bankers throughout the day.
All economic data releases and events can be found at DailyFX economic calendar
On Tuesday, the US Bureau of Labor Statistics will release the latest inflation data in the UK at 1.30pm. Core inflation is expected to fall to 3.8% year-on-year (January) from 3.9%, while headline inflation is expected to fall to 3% from 3.4% in the previous month.
While the Federal Reserve will welcome any easing in US price pressures, it is unlikely to move the lever towards a rate cut in March. Current market prices show that the probability of a 25 basis point rate cut in March is only 17.5%.
The daily gold chart shows the precious metal's current lack of volatility. Gold remains stuck in a tight trading range, with the current 14-day ATR showing just above $20. Resistance remains at around $2,044/ounce. range while support is seen at $2,010/0z. before $2,000/oz. Gold traders are hoping Tuesday's U.S. inflation data will bring some volatility to the precious metal.
Gold daily price chart
Chart via TradingView
Data from retail traders shows that 66.31% of traders are net-long, with the ratio of traders long to short being 1.97 to 1. The net-short of traders is 8.05% higher than yesterday and 2.21% lower than last week.
We typically take a contrarian view of crowd sentiment, and the fact that traders are net-long suggests gold prices could fall further.
Learn how daily and weekly changes in IG Retail Trader data can impact sentiment and price action.
|
Change into |
Longs |
Short pants |
HEY |
| Daily | 4% | 12% | 7% |
| Weekly | 6% | 0% | 4% |
What does this mean for price developments?
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Unlike gold, Bitcoin traders are enjoying a renewed bout of volatility, with the largest cryptocurrency by market cap currently awaiting a test of levels last seen in December 2021. The recent sell-off and post-ETF rally has pushed BTC/USD back up to $48,000, with the January 11 high at a fraction below $49,000 as the next target. There is little resistance up here on the weekly chart before the $52,000 level comes into play.
The recent rally is being fueled not only by the successful release of a number of spot Bitcoin ETFs last month, but also by the Bitcoin halving expected on April 17th. The Bitcoin halving is an event that occurs approximately every four years and is programmed into the Bitcoin code that reduces miners' rewards for adding new blocks to Bitcoin by 50%. This decrease in supply leads to increased scarcity and when demand for Bitcoin remains constant or increases, this drives up the price of BTC. In 2012, the halving caused BTC mining rewards to decrease from 50 BTC to 25 BTC, in 2016 from 25 to 12.5 BTC, and in 2020 from 12.5 BTC to 6.25 BTC. At next year's halving – expected in mid-April – the reward for mining a Bitcoin block will be reduced to 3,125 BTC.
Weekly Bitcoin price chart
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What is your opinion? Gold and Bitcoin – bullish or bearish?? You can let us know using the form at the end of this article or contact the author on Twitter @nickcawley1.
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