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Gold Soars as Geopolitics and Fed Uncertainty Fuel Safe-Haven Demand

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  • May 5, 2025
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Gold prices rallied more than 1% on Monday, fueled by safe-haven demand as geopolitical tensions rise and with investors expecting the Federal Reserve’s next interest rate decision. Geopolitical tensions, such as a Houthi missile strike close to Ben Gurion airport and rising hostilities in Gaza, and U.S. President Trump’s attack on the Fed, have led investors to take refuge in gold. Although the CME FedWatch tool shows a low likelihood of a rate cut this week, markets are anticipating a potentially more dovish attitude in the subsequent months. According to technical analysis, gold could continue moving upward, and the important resistance points are at $3,290 and $3,320, and the support points at $3,244 and $3,219. KEY LOOKOUTS • Ongoing tensions in the Middle East, such as the Houthi missile attack on Ben Gurion airport and Israel’s subsequent military retaliation, continue to increase market uncertainty, fueling safe-haven demand for gold. • The Federal Reserve’s May 7 meeting is a key event for market sentiment. Although no rate cuts are anticipated, any indication of dovishness or slowing of rate hikes could continue to support gold prices. • President Trump’s continuing criticism of the Federal Reserve and Chairman Jerome Powell, along with the possibility of political pressure, may lead to the Fed’s policy direction in the future, affecting gold as a safe-haven asset. • Gold has breached significant resistance levels, with the next targets being $3,290 and $3,320. Nevertheless, robust support is established at $3,244 and $3,219, which may decide whether the uptrend momentum will be sustained. As geopolitical tensions increase, especially with the Houthi attack close to Ben Gurion airport and Israeli military build-up, investors are rushing towards gold as a safe-haven asset. With the Federal Reserve’s rate decision approaching on May 7, the market is anxiously awaiting any hints of dovishness, particularly as President Trump continues to put pressure on the Fed to reduce rates. Although short-term rate cuts are not expected, the potential for a dovish stance in the next few months could continue to fuel gold price gains. Technically, gold has penetrated key resistance levels and the next possible targets are $3,290 and $3,320, and support continues to be firm at $3,244 and $3,219, positioning for potential further upward movement. Gold prices have shot up as a result of escalating geopolitical tensions and expectations for the Federal Reserve rate decision on May 7. As tensions in the Middle East continue to increase and Trump keeps criticizing the Fed, gold is a robust safe-haven asset, bolstered by technical support levels above $3,244. • Increasing tensions, such as the Houthi strike on Ben Gurion airport and Israel’s subsequent military response, are increasing market uncertainty and supporting demand for gold as a safe-haven asset. • U.S. President Donald Trump’s ongoing frustration with the Federal Reserve and demands for rate cuts may affect market sentiment and Fed policy actions. • The Federal Reserve will make its rate decision on May 7, with markets looking for no rate cuts but keenly awaiting any signs of dovishness in reaction to recent economic news. • Gold has surged by over 1% as investors rush to it due to geopolitical uncertainty and a risk-averse economic outlook. • Gold has broken key resistance levels at $3,265, with possible upside targets at $3,290 and $3,320. • Firm technical support for gold is at $3,244 and $3,219, which may act as a floor for prices if there is any pullback. • Even with recent softening in U.S. economic data, gold continues to be an attractive hedge, especially if the economy is threatened by stagnation or recession risks from extended high rates. Gold prices have risen as investors look for safety in the face of increasing geopolitical tensions, such as the Houthi attack on Ben Gurion airport and rising tensions in the Middle East. These events, combined with uncertainty over the Federal Reserve’s next action on interest rates, have prompted traders to consider gold a safe investment. President Trump’s consistent vitriol against the Fed, coupled with his rate cut calls, has introduced more volatility to market sentiment, and gold has become a greater option for investors who want to safeguard their investments against possible economic turmoil. XAU/USD DAILY CHART PRICE CHART SOURCE: TradingView With the rate decision by the Federal Reserve just around the corner on May 7, the markets are anxiously watching for any indication from the Fed of impending rate cuts or a dovish policy. While no short-term rate cuts are anticipated, the general economic environment, with softening in some areas, has fueled speculation that the Fed might refrain from tightening monetary policy further. This ambiguity, coupled with the persistent geopolitical tensions, still underpins gold’s safe-haven status, with investors taking bets on its capacity to withstand possible economic setbacks or extended episodes of market turbulence. TECHNICAL ANALYSIS Gold has just cleared major resistance points, pointing towards a possible continuation of the positive trend. The price crossed the $3,265 level, hinting at further potential on the upside with near-term levels of resistance at $3,290 and $3,320. On the negative side, support is firm at $3,244, with further support at $3,219. These technical levels are important in defining gold’s near-term price direction, as a break below these support levels could indicate a change in sentiment, while further strength above them can confirm the bullish view. The latest price action is being watched carefully to determine if the upward trend will be maintained in the days before the Fed’s rate announcement. FORECAST Gold will continue to gain, fueled by both geopolitical uncertainty and market volatility over the Federal Reserve’s policies. With global risks still on the rise, investors will continue to turn to gold as a safe-haven asset. If gold holds firm above the $3,265 resistance level, it may test the next crucial levels at $3,290 and $3,320. A sustained dovish stance by the Federal Reserve, especially if they indicate no near-term rate cuts or additional monetary tightening, would also continue to support the uptrend. As long as geopolitical tensions continue

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Bitcoin Price Forecast BTC Rebounds Above $97K Ahead of US CPI Data Release
Bitcoin Crypto

Bitcoin Price Forecast: BTC Rebounds Above $97K Ahead of US CPI Data Release

Bitcoin (BTC) has been on a strong rebound, trading above $97,000 on Wednesday after testing the critical psychological level of $90,000 earlier this week. This price rebound comes as traders prepare for potential volatility ahead of the upcoming US Consumer Price Index (CPI) data release. Soft inflation data, such as the latest US Producer Price Index report, has triggered a renewed appetite for riskier assets like Bitcoin. Investors are keenly watching the CPI data since it could impact the future interest rate decisions of the Federal Reserve. Key Lookouts •  Bitcoin rebounded, trading above $97,000, after testing the $90,000 psychological level early this week on expectations of more volatility before US CPI data. •  The US Producer Price Index came in softer than expected, giving a boost to risk assets, including Bitcoin and pausing a rise in US Treasury bond yields. •  Analysts expect potential expansionary policies under Donald Trump, including tax cuts, which could support risk assets, including Bitcoin, in the coming months. •  Bitcoin’s technical indicators are showing bullish momentum, with the Relative Strength Index (RSI) above neutral and the MACD nearing a bullish crossover, signaling potential further price increases. Recent inflation data, especially the US Producer Price Index for December, which indicated a slower-than-expected increase in wholesale inflation, has played a significant role in Bitcoin’s price action. This has again brought renewed interest in risk assets like Bitcoin, hinting at the possibility of softer inflation and possible rate cuts by the Federal Reserve. Softer inflation might alleviate some fears over rising interest rates and will provide a relatively better environment for Bitcoin to sustain its recovery process. As the US Consumer Price Index (CPI) data are due to be published, any signal of lower inflation might add strength to the upward pressure on Bitcoin. Here are some of the important factors that make Bitcoin’s price action and its probable future movements in the market so interesting: •  Bitcoin recovered strongly, rising above $97,000 after retesting the critical level on $90,000 last week. It may potentially enable more price appreciation. •  Traders remain on high alert ahead of the release of the US Consumer Price Index data, which could have a profound impact on Bitcoin’s price action. • The softer-than-expected US Producer Price Index (PPI) for December has improved the appetite of investors for risk assets such as Bitcoin, with hope that the inflation might have already peaked and interest rates might be cut by the Federal Reserve. •  If the inflation data is within expectations, then the Federal Reserve may relax on its stance for interest rates, which can help in creating a more favorable environment for Bitcoin and other risk assets. •  A report from K33 Research indicates that the expected expansionary economic policies of former President Donald Trump, including extending tax cuts and relief for working-class Americans, could positively impact risk assets like Bitcoin in the future. •  Bitcoin has shown an increasing correlation with traditional equity markets, especially the Nasdaq, reflecting broader market sentiment and making Bitcoin more sensitive to movements in the stock market. • Rising US 10-year Treasury bond yields and a strengthening US Dollar have squeezed Bitcoin’s price, which tumbled below $90,000 earlier this week before rebounding. • On the technical front, Bitcoin shows positive momentum: its Relative Strength Index (RSI) is well above neutral and the Moving Average Convergence Divergence (MACD) is positive and rising, signaling an upward trajectory if the price continues to move upwards. •  If Bitcoin can hold the recovery and close above $100,000, it could aim for a retest of its all-time high near $108,353. However, support is likely around $85,000 if the market correction continues. The correlation between Bitcoin and traditional financial markets, especially the Nasdaq, has been increasing in recent months. As shown in the latest K33 Research report, Bitcoin has been trending in sync with the equity markets for the most part, especially in the event of market corrections. Treasury bonds and the US Dollar have recently exerted pressure on Bitcoin, sending it below $90,000. However, Bitcoin managed to rebound since then, which means most of the investor sentiment still remains positive for the digital asset. BTC/USD Daily Price Chart Source: TradingView, prepared by Jacob The correlation of Bitcoin with the traditional financial markets, especially Nasdaq, has been rising lately. As has been observed from a recent report by K33 Research, Bitcoin has moved in tandem more with the trends of the overall equity market especially during periods of volatility. Pressure from rising Treasury bond yields and a stronger US Dollar has seen Bitcoin fall to below the $90,000 mark recently. However, Bitcoin has since rebounded, which indicates that investor sentiment towards the digital asset remains largely positive despite external pressures. Technical Analysis Bitcoin is currently exhibiting bullish momentum and trading above $97,000. The Relative Strength Index is at 52, which is an indication of growing upward pressure, and the Moving Average Convergence Divergence is near a bullish crossover, meaning the price might go up. Immediate resistance is around $100,000, with a break above this level targeting the all-time high of $108,353. Key support lies around $90,000 and further near $85,000 if the price faces any correction. Support and Resistance Forecast The primary support area is at around $90,000, a major psychological level which previously had provided a bounce in the past. It’s expected that, if the price breaks below this level, the main next support would be at $85,000, which might help limit declines further. A sustained move below $85,000 may indicate deeper bearish momentum towards $80,000, thus becoming significant levels to determine the price action of the Bitcoin in its short term and may be directing the purpose of any potential recovery process. The immediate resistance for Bitcoin is at the $100,000 level, which is a psychological barrier. If Bitcoin breaks above this level, the next significant resistance is seen near the all-time high of $108,353. A breakout above this level could push Bitcoin toward new highs, potentially targeting $115,000

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Australian Dollar Gains Ground as US Dollar Weakens Ahead of Key Inflation Data
AUD/USD Currencies

Australian Dollar Gains Ground as US Dollar Weakens Ahead of Key Inflation Data

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  • January 15, 2025
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The strength gained recently by the Australian Dollar was partly driven by improved market sentiment, broad China trade data, and rising commodity prices. An additional factor for the AUD is the stabilizing momentum as created by Beijing regarding stabilizing the Yuan. On the contrary side, the US Dollar has declined following the December Producer Price Index that came way worse than expected. Thus, as a result of this, traders are now focusing on upcoming US inflation data regarding future market trends. Key Lookouts Consumer confidence in Australia’s Westpac Consumer Confidence Index slid by 0.7% in January. This continued the trend of pessimism, in part a response to the loss of AUD in value relative to the USD. Market pricing suggests a 67% probability of the RBA cutting the cash rate by 25 basis points in February, with cuts through to April. US NFP data reported an increase of 256K jobs in December; it was better than expected but did not produce the desired result as the mixed reaction in markets indicated. Here are the key developments influencing the Australian Dollar and US Dollar dynamics in the current market environment: Consumer confidence remains one concern in Australia. The Westpac Consumer Confidence Index fell by 0.7% in January, indicating that Australian households remain pessimistic. The decline in confidence is partly due to the depreciation of the AUD against the USD, which has caused concerns about the cost of living and economic conditions. Consequently, markets are factoring in a 67% chance of the Reserve Bank of Australia (RBA) to cut interest rates by 25 basis points in February and expect more cuts in April to sustain the economic activity. AUD/USD Daily Price Chart Source: TradingView, prepared by Jacob Although there have been difficulties for the consumer sentiment in Australia, risk sentiment from other parts of the world has given some boost to the AUD. Strong trade data from China and rising commodity prices have helped boost the outlook for Australia’s economy, which is heavily reliant on exports. Moreover, Beijing’s efforts to stabilize the Yuan have contributed to a more favorable environment for risk-sensitive currencies like the AUD. With positive global factors at play, the Australian Dollar is likely to remain supported but its movement would be largely related to the future economic data released from Australia as well as from the US. Technical Analysis The AUD/USD pair is still trading within a descending channel on the daily chart, at around 0.6190. The immediate resistance is found at the 9-day EMA at 0.6193, then at the 14-day EMA at 0.6207. The next resistance is seen near the upper boundary of the descending channel, at around 0.6220. Support may be tested near the lower boundary of the channel, at around 0.5940, if the bearish momentum continues. Support and Resistance Forecast Support for the AUD/USD remains at 0.5940, which aligns with the lower boundary of the descending channel. If this level is unable to hold as support, it may open a way for even more downside action, potentially moving towards 0.5900. A violation below 0.5940 would be very bearish in nature and allow for a breakdown to even weaker levels in the short term.The key resistance for the AUD/USD pair will be at 0.6193, with the 9-day Exponential Moving Average placed there, and at 0.6207, marked by the 14-day EMA. If the pair breaks above this level, it could test the upper boundary of the descending channel around 0.6220. A strong move beyond 0.6220 could signify a change in momentum, sending the pair further up to resistance zones around 0.6250 or 0.6300.

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Currencies EUR/USD

EURUSD Bounces Back to the Highs of Almost 1.0550 After a Dive from New Yearly Lows

EURUSD Bounces Back to the Highs of Almost 1.0550 After a Dive from New Yearly Lows EUR/USD erased substantial losses after a run of five consecutive negatives, bouncing to the areas around 1.0540 during Asian trading on Friday. This followed the US Dollar Index (DXY) taking its first retreats from the newest yearly high reached at 107.06. Both dovish comments by Federal Reserve Chairman Jerome Powell and mixed US economics data influenced the move. Despite the strength in Euro, the European Central Bank still remains cautious on the economic outlook, leaving its future movements toward the pair subject to developments both in the US and the Eurozone. EUR/USD’s Recent Rebound and the Pullback in the US Dollar The currency pair EUR/USD recovered some of the losses because of a correction within the US Dollar. As the US Dollar Index (DXY) had skyrocketed to 107.06 for the year, the reversal in this upward trend for the greenback, as well as its corresponding reversal for the Euro itself, contributed to a modest rebound for the Euro, and EUR/USD advanced toward 1.0540. US Dollar Pulls Back Some of the factors behind the U.S. Dollar’s pullback have been the slowdown of so-called “Trump trades,” that had been helping the dollar out in the first half of the year. These trades-tied very closely to expectations surrounding economic policies from the previous U.S. administration-have started to lose some of their momentum as market sentiment shifts. Simultaneously, comments from Fed Chair Jerome Powell regarding the US economy lighten the tone of the US Dollar. Powell described the US economic performance as “remarkably good, thus giving Federal Reserve some leniency to slowly trim its interest rates. Contrastively, such rhetoric is diametrically opposed to the more hawkish tone that had prevailed in communications until now by the Fed, thus questioning a change in policy that should continue to weaken the Dollar at least in the short term. Mixed US Economic Data Powell’s comments came simultaneously with the release of US PPI numbers. The PPI index increased 2.4% year-over-year in October, beating the revised 1.9% of September and more than the market’s expectations of 2.3%. Meanwhile, the Core PPI for the month rose 3.1% YoY from 3.0% expectation, which eliminates food and energy prices. Although the data showed inflationary pressures were on the rise, which would play into the hands of the USD in the long run, the immediate reaction was tame because attention shifted to Powell’s more dovish talk over interest rates.The convergence of these factors saw DXY pull back, falling to around 106.80 at time of writing, providing some respite to the Euro and pushing EUR/USD higher from recent lows. EUR/USD Daily Chart Source: TradingView, by Richard Miles ECB in a Catch 22 Situation: How to Cut Rates while Tackling Inflation Though the Euro has gained a few percent against the US Dollar, European Central Bank ECB is now caught between the politics of rate cuts, and home-grown inflationary concerns. Home-grown inflationary pressures-the central issue for ECB officials-arise from the boost in wages. ECB is emphasizing more on cutting of interest rates. Showing an increased receptivity to cut rates, the central bank at the monetary policy meeting in October signaled that it was indeed turning its ears to the calls of the reducing economy. This news marks a change in tone especially since the growth fell way slower than expected, and equally, inflation data in the Eurozone remains weak. For Isabel Schnabel, an ECB board member, interest rates remain the prime instrument for policy changes but the secondary adding instruments are buys on bonds and forward guidance. While the ECB is paying increasing attention to cuts in rates, it has been quite cautious in taking concrete steps for some time now because the inflationary pressures continue unabated in the Eurozone. With hard-striving increases in wages coupled with the growth in labor productivity lagging behind, the raised fears of a wage-price spiral – where the increase in wages leads to higher prices that trigger even more wage increase in a spiral ride – belie this potential outcome working adversely for the ECB’s desired goal of putting inflation back on track. ECB Cautious on Inflationary Pressures The ECB is more sensitive to the realization that an early policy response, in this case, even some rate cuts, will mean high inflationary pressures. The central bank has thus indicated a need for more data before doing significant policy changes. The situation remains fluid, and the ECB is likely to continue monitoring the economic and inflationary landscape very carefully before making its next move. Meanwhile, the Eurozone is likely to continue struggling to find elusive momentum in growth. Most analysts think it will slow down in 2025. Cut in rates by the ECB would weaken the Euro further though the timing and full quantum of cut are still unclear. Key Economic Data to Watch The movements of the EUR/USD pair are likely to be sensitive to these upcoming data releases, especially from both the US and the Eurozone. Here are some of the key economic events and indicators to monitor in the coming days: US Economic Data US Retail Sales (October): Details about US retail sales may help explain the soundness of the US consumer-the very pulse of the whole economy. Better-than-expected retail sales can also be an additional strength for the US dollar if it translates to continued demand despite higher inflation. US CPI (Consumer Price Index): The main ‘event’ in the Dollar’s line-up will be the release of the US CPI report. In case inflation remains at these levels or even increases further, then this might lead to ideas about the Fed rate policy turnaround and hence a boost for the USD. Eurozone Economic Data Eurozone GDP Growth (Q3): The GDP data for the Eurozone will say much about its general health. Weaker growth than expected would only raise more concerns regarding the Euro outlook, while stronger growth could support the Euro in the short term.Eurozone CPI (Oct): Eurozone inflation

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