Gold Price Forecast: Is Bitcoin Taking the Shine Away From Gold?
Jul 29, 2021
Neutral Fed Keeps USD and Yields Lower
Gold View for a Return to 1900
Overall, yesterday’s Fed meeting was on the neutral side and while the Fed had acknowledged that there had been some progress towards their goals, Chair Powell made clear that substantial progress has yet to be reached. That said, with little surprises from the Fed, my view remains that some taper excitement can be expected at the next month’s Jackson Hole Symposium, a rather fitting time as it would mark the anniversary of the announcement of average inflation targeting.
A neutral Fed has done little to support the greenback which resides at the July lows, while real yields hover around the record lows, both factors, however, bode well for Gold. In turn, I am bullish on the precious metal with the view of a return to 1900. Although, what has taken me by surprise has been the rather lacklustre price action in the precious metal, despite the two variables for Gold becoming increasingly bullish. In the meantime, Bitcoin has gone from strength to strength since the false break of 30k, subsequently testing 40k. Now while I don’t look at Bitcoin in isolation, I do look at it for its relevance and possible implication in other markets that I watch, such as gold. That being said, given recent price action, perhaps the cryptocurrency has taken some of the shine away from gold. Unlike prior periods of above average inflation, gold now faces greater competition to grab the attention of portfolio managers.
Taking a look at the technical front, the 200DMA (1820) has capped upside, for now, should this break, additional resistance resides at 1830-35 (prior rejection zone). As I said previously, as real yields attempt to find a bottom and with the USD extending losses, my view is for a return to 1900. On the downside, support sits at 1790 while the view for upside will be negated should the precious metal close below 1760.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.
tastytrade is a trademark/servicemark owned by tastytrade.
tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”).
tastyworks, Inc. (“tastyworks”) has entered into a Marketing Agreement with tastytrade (“Marketing Agent”) whereby tastyworks pays compensation to Marketing Agent to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastyworks. tastytrade is the parent company of tastyworks. tastyworks and Marketing Agent are separate entities with their own products and services. tastytrade has different privacy policies than tastyworks.
Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.