Gold Glitters Again: Climbs to $3,670 Despite Dollar Strength.
Gold (XAU/USD) rose by 0.69% on Friday, reaching $3,670, even though the US dollar remained strong. After hitting a low of $3,630 earlier in the week, buyers stepped in, pushing the price of the non-yielding metal higher during the North American session.
Fundamentals: Fed’s Rate Cut and Asian Demand Fuel Optimism
The Federal Reserve cut interest rates by 0.25% and signaled that there may be two more cuts by the end of the year. This has created a favorable environment for gold prices.
Fed Chair Jerome Powell stated that the rate cut is intended to manage risks, but many investors remain hopeful. In Asia, demand for gold is strong. China’s gold exports went up to 35 tonnes in August, the highest level since May 2024. India has also increased its gold imports. However, Swiss gold exports to the US fell by 99% in August due to worries about tariffs, though exemptions were finalized in September.
Technical Analysis: Gold Eyes Record Highs
Gold’s uptrend resumed above $3,650, with XAU/USD testing $3,670 and eyeing the all-time high of $3,703. The Relative Strength Index (RSI) rebounded from the overbought level of 70, indicating renewed buyer momentum. The 50-day Moving Average (MA) near $3,600 provides firm support. If bullish momentum persists, resistance levels at $3,750 and $3,800 are in sight. A break below $3,650 could see prices test the September 11 low of $3,613, followed by the psychological $3,600 level.
Dollar Rallies Post-Fed, Sterling Slumps on UK Fiscal Fears
The US Dollar extended its rebound on Friday, with the DXY Index climbing 0.3% to 97.662, stabilizing after a 1% drop earlier in the week. The Fed’s cautious 25-basis-point rate cut and “dot plot” projecting two additional cuts this year tempered expectations for rapid easing, supporting the greenback. “This is a counter-trend move,” said Marc Chandler of Bannockburn Forex, hinting at potential selling opportunities soon.
Sterling’s Struggle: UK Borrowing Woes Weigh Heavy
The British pound (GBPUSD) fell 0.6% to $1.3468, marking its most significant two-day drop since April. UK borrowing exceeded expectations, raising concerns about Finance Minister Rachel Reeves’ financial challenges ahead of the budget on November 26. Although retail sales rose 0.5% in August, concerns about potential tax increases persist. At the same time, the yen strengthened after the Bank of Japan decided to keep interest rates steady, despite some disagreement among board members.
Technical Analysis: Dollar and Sterling Trends
US Dollar (DXY): The DXY Index is testing resistance at 97.662, with the 200-day MA near 98.000 as the next hurdle. The RSI is neutral at 50, suggesting room for further gains. Support lies at 97.000, with a break below potentially targeting 96.500, the September low.
Sterling (GBPUSD): GBPUSD is approaching the 50-day MA at $1.3400, with support at $1.3300. The RSI is trending toward oversold levels, indicating potential exhaustion in selling pressure. Resistance at $1.3550 must be cleared for a bullish reversal; however, fiscal concerns may cap the upside.
Bitcoin Stays Resilient: Holds Above $116,000 on Fed-Fueled Risk Appetite.
Bitcoin (BTC) maintained its bullish run, trading above $116,000 on Friday after three consecutive weeks of gains. The Fed’s dovish 25-basis-point rate cut to 4.0%-4.25% and projections of further easing in 2025 sparked risk-on sentiment, lifting cryptocurrencies.
Institutional and Corporate Demand Drive BTC
Bitcoin reached $117,000 on Thursday, thanks to $664.03 million in inflows from Bitcoin spot ETFs. This marks four weeks of positive inflows. There was a rise in corporate buying, with Strategy adding 525 BTC to its total of 638,985 BTC. Capital B and Prenetics also contributed 88.6 BTC. The Fed predicts interest rates will be 3.6% by 2025, 3.4% in 2026, and 3.1% in 2027. These forecasts support riskier assets, such as Bitcoin.
Technical Analysis: BTC’s Bullish Structure Intact
BTC is consolidating above $116,000, with support at the 20-day MA near $115,000. The RSI remains above 60, reflecting strong bullish momentum. A breakout above $117,000 could target the psychological $120,000 level, with further resistance at $125,000. A drop below $115,000 may test the 50-day MA at $112,500, a key support level.
Ethereum Slips 3% as Fusaka Upgrade Looms.
Ethereum (ETH) fell by 3% on Friday as developers announced that the Fusaka upgrade will launch on the mainnet in December. This upgrade will include 12 new proposals to enhance data verification, storage, and the functionality of smart contracts. Testnet releases are scheduled for October 1 (Holesky), October 14 (Sepolia), and October 28 (Hoodi). After the Fusaka upgrade, the capacity for blobs will double, which will help improve Layer 2 scalability. Developers have warned that there is a 50/50 chance of delays in the testnet due to unresolved bugs.
Fundamentals: Liquidations and Validator Queue
ETH faced $89.8 million in futures liquidations, with $83.5 million of that amount attributed to long positions. Meanwhile, Ethereum co-founder Vitalik Buterin defended the network’s validator queue design as unstaking wait times hit 43 days.
Technical Analysis: ETH’s Cup and Handle in Focus
Ethereum (ETH) is once again testing the 20-day simple moving average (SMA) after hitting resistance at $4,620. It has support at the 50-day SMA around $4,300. If it rebounds, it could confirm a cup-and-handle pattern, possibly pushing ETH up to $5,300. This target comes from the height of the pattern projected from where it breaks out. The Relative Strength Index (RSI) and Stochastic Oscillator indicate neutral trends, suggesting that bullish momentum is waning. If ETH closes below $4,200, it might drop to the critical $4,000 level.
Conclusion:
Markets Ride Fed Waves and Technical Signals
This week, gold and Bitcoin performed well following the Federal Reserve’s announcement of a rate cut. The price of gold (XAU/USD) rose to $3,670, while Bitcoin (BTC) stayed above $116,000, driven by strong interest from institutions and its technical strength. The US Dollar strengthened, but the British pound weakened due to worries about the UK’s fiscal policy.
Ethereum’s Fusaka upgrade shows promise for the future, but it still faces short-term price risks. Technical indicators suggest that gold and Bitcoin may break out soon, while Ethereum and GBP/USD are testing critical support levels. As global markets respond to the Fed’s actions and economic shifts, investors are shifting their focus to riskier assets.
