Gold heals around the intraday low of $1,815. Meanwhile, traders await key US data on Thursday. Despite this, the risk-aversion mood is thought to be putting downward pressure on gold. So what will happen today? How will the precious metal, Bitcoin and altcoins be affected in light of the expected developments? Here are the details…
Precious metal started the day with a decline
Gold started the day at very low levels. Important US data are cited as the reason behind this. Also, the precious metal’s hesitancy to drop further could be linked to the US dollar’s pullback from two-week highs, experts say. However, the US Dollar Index (DXY) slumped to 104.99 and made a two-day recovery. Thus, it sees it at the highest levels of the last two weeks.
The dollar’s losses appear to be linked to a fresh increase in US Treasury bond yields. US 10-year Treasury yields capture the two-day downtrend as key bond coupons rose one basis point (bp) from weekly low to press to 3.10 percent. However, analysts caution that the pessimistic pressures and inflation woes from U.S. stock futures are likely to last longer. It should be noted that this also puts downward pressure on the gold price, along with fears that it could trigger a recession.
This development is expected for gold prices
Meanwhile, an update on the personal consumption expenditures (PCE) price index is coming today. The Fed prefers to evaluate inflation using the core PCE, a metric that excludes the PCE price index and food and energy prices, which tend to be more volatile.
Recently, Deutsche Bank, the first major US bank to call for a recession, has signaled that US inflation may continue to disappoint the Fed. As we reported on Kriptokoin.com, on Wednesday, leading central banks announced that they are ready to fight inflation for the sake of short-term economic slowdown. This may have stifled market sentiment and the gold/USD pair.
For example, Fed Chairman Jerome Powell stated that they are ready to announce a further 0.75% rate hike if necessary. In other words, he repeated his last word on the fight against inflation. The Fed Chairman also praised the economic strength of the United States. This helped keep the US dollar stronger. Powell’s comments suggesting challenges for US employment data during the fight against inflation are thought to weigh on the recent risk profile. Going forward, the US Core Personal Consumption Expenditure (PCE) Price Index, which is expected to be 0.4 percent compared to the previous 0.3 percent, will be a major catalyst for short-term levels, according to analysts.
How will Bitcoin and altcoins be affected?
Bitcoin and altcoins tend to be inversely correlated with gold, especially lately. It is strongly correlated with more volatile assets such as stocks, rather than safe-haven assets such as gold. Therefore, as a result of the disclosure of the data, the value of shares and gold can be looked at for the price of Bitcoin, which has been seriously affected by macro developments recently. Bitcoin’s price action also generally affects altcoins in a parallel fashion.
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