Post-Dump Rebound: Gold, Bitcoin, US Stocks & Analyst Insights

• News
• 2024-10-18

On Thursday morning, asset prices from stocks to cryptocurrencies and gold showed an upward trend, as the retreat of the US dollar helped to alleviate pressure on risk assets, while Tesla's solid earnings report and optimistic sales forecasts boosted hopes for a strong earnings season.

Mark McCormick, Managing Director and Global Head of FX and Emerging Markets Strategy at TD Securities, said: "The US dollar has recently regained some of its lost vitality, reflecting a series of factors that we have been expecting to be favorable to it recently." "Most importantly, the 'data' narrative has turned in favor of the US, central banks are repricing, and related macro volatility has intensified. US stocks continue to outperform the market."

Amid uncertainty about who will win and how their policies will affect the economy, McComic pointed out that the outcome is a "binary event with huge tail risks for both sides."

McComic noted: "Alternatively, we have a blue wave. This is the worst outcome for the US dollar, reflecting first and second-order effects."

He added: "The second impact is that as taxes increase and regulations tighten, the performance of US stocks begins to lag behind the rest of the world, and the blue wave may start to weaken the US dollar." "China's stimulus plan seems to be a game-changer, as the market is looking for alternatives to US stocks, starting to turn to Asian foreign exchange, and seeking 'value' in foreign exchange."

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In terms of the stock market, David Morrison, Senior Market Analyst at Trade Nation, emphasized that "although the stock index rebounded pleasingly this morning, it has been a disappointing week so far, with most major stock indices falling significantly from their recent highs."

He said: "Yesterday's decline was led by the technology stock-dominated Nasdaq index, which eventually closed down 1.6%. Despite a late rebound in the last two hours of trading, which helped all major stock indices recover from their daily lows, investors were uneasy about the ongoing bond sell-off, leading to a surge in bond yields. This started after the Fed cut interest rates by 50 basis points last month and has continued to this day. But this has provided an opportunity for stocks that have been rising over the past 12 months."

He added: "So far, every significant pullback has proven to be an opportunity for investors to increase their risk exposure at lower prices." "Even the summer panic, that is, the unwinding of the yen carry trade coincided with a decline in US economic data, only lasted a little more than a few weeks. Since then, the Fed has cut interest rates by 50 basis points and is expected to cut more before the end of the year."

Morrison said: "Combined with strong labor and retail sales data, as well as forecasts for third-quarter GDP growth of more than 3%, you have the Goldilocks scenario." "The only fly in the ointment is that there is a significant danger in the presidential election voting, which cannot provide a clear winner on November 6."

Regarding gold, Morrison noted that "gold prices fell yesterday, marking the first significant decline in two weeks."He emphasized: "Since testing the support level slightly above $2,600, the market has experienced a stable and relatively robust increase." In the two weeks since then, the stock has risen by about 5%, setting a new high slightly above $2,750 yesterday morning. Subsequently, the price retreated, with selling accelerating after the U.S. market opened, then finding support above $2,700. Since then, the price of gold has been on the rise.

Morrison warned that although "it is easy for people to think that the pullback is over and the bulls can call out 'all clear' for the rise in gold prices... the bulls should be prepared for further suppression of gold prices."

He said: "If that is the case, it is important to see whether $2,700 continues to act as support." "Silver, which hit a 12-year high on Tuesday, also took a hit yesterday. However, the support level remained around $33.50, as there was no obvious or long-term breakthrough of this level. Prices rebounded to above $34 in the early morning session today, which is also constructive from a bullish perspective."

Currently, spot gold is trading at $2,731.80, up 0.63% during the session.

As for cryptocurrencies, data provided by TradingView shows that Bitcoin (BTC) bulls reacted to yesterday's plunge to $65,200 by pushing up, taking the King Crypto to the resistance level of $68,000 before bears fought back, leading to a pullback to the support level of $67,700.

FxPro's Chief Market Analyst, Alex Kupcsikevich, wrote: "Since the opening on Thursday, the cryptocurrency market has been on the rise, recovering strongly from the global financial market sell-off in the late afternoon on Wednesday." "At the lowest point, the market cap dropped to $2.23 trillion, and at the time of writing, the market cap has risen to $2.32 trillion (an increase of 0.1% in 24 hours). The market's intraday movements will reveal whether this is the last stand of the bear market or if the current rebound is just a bull trap."

"Bitcoin's intraday movement is bullish," he added. "The closing low on Wednesday broke below $65.5k, completing a 61.8% Fibonacci retracement of the October 10th to 21st rally. A swift exit from the recent high of $69.5k would make the primary scenario an extension of the upside and could strengthen to $76k before further consolidation."

Currently, Bitcoin is trading at $67,801, up 2.39% on the 24-hour chart.