What to Know
- Bitcoin is showing signs of fatigue after its recent rally and could see a pullback.
- BTC remains within a consolidation range of roughly $77,000 to $82,000.
- Rising U.S. Treasury yields are creating headwinds for non-yielding assets.
- Gold is facing pressure ahead of the Federal Reserve’s rate decision and press conference.
- Gold could be developing a potential head-and-shoulders pattern.
- A more hawkish Fed could weigh further on gold, while a dovish tone could support the precious metal.
- Despite near-term pressure, the longer-term technical structure for gold remains constructive.
The fundamental backdrop right now for pretty much everything revolves around the Federal Reserve and interest rates in the United States. This is mainly due to the ongoing saga in the Middle East about oil disruption and the energy inflation that it will bring around the world. Some countries are going to face more problems than others.
At this juncture, the situation seems to be one that we are just stuck with: interest rates rising the way they have in the United States, with the 10-year yield reaching 5%. It does put some downward pressure on non-yielding assets. Marry that with the idea that we have an interest rate decision, and more importantly, a press conference on Wednesday coming from the Federal Reserve, and you have the recipe for volatility in risk assets across the board.
Bitcoin has fallen a bit in the early part of the session
Bitcoin has fallen a bit in the early part of the session, and it is starting to struggle a bit to continue the upward pressure. As things stand right now, it is still holding consolidation, but it also looks like it is getting a little bit tired. A pullback would not necessarily be the most out-of-sorts thing to happen. After all, it went straight up in the air a couple of weeks ago, and perhaps catching a little bit of value might be the play for traders here.
On the other hand, if we turn around and rally from here, you could have a situation where we just continue the consolidation between roughly $77,000 and $82,000.
Gold continues to see rate pressures as well
The gold market faces the same problem. It is about yields of the non-yielding asset, with the interest rate decision coming out on Wednesday, but more importantly, that press conference afterwards. Gold is facing a few problems here.
Technically speaking, one could make an argument for a little bit of a head-and-shoulders pattern playing out. We will just have to wait and see. Longer term, I still like gold, but it does make a certain amount of sense that it is not doing well in this environment. When you look at it from the long-term chart and structure, though, it is still somewhat lively. We have been in a little bit of a range the last couple of weeks, and now we are going to wait to see exactly how hawkish the Fed sounds. The more hawkish they sound, the worse it is for gold, and of course, vice versa.
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