Gold’s Success: Rising to New Heights
Gold (XAU/USD) had an impressive week. It briefly fell below $3,000 early on due to rising US 10-year bond yields. However, by Friday, it surged to a record high above $3,333.10. Now, it is trading near $3,300, which is about a 10% increase for the week. This rise is driven by strong demand for safe-haven assets and a weaker US Dollar.
Technical Analysis:
- Daily Chart: Gold remains in a powerful bullish trend, trading well above the 20-day SMA ($3,100), which acts as dynamic support. The RSI is overbought (80), signaling potential consolidation, but no reversal patterns are evident. The price is within an ascending regression channel, with support at $3,100 and a deeper floor at $2,900. Resistance is at $3,400–$3,408.
- 4-Hour Chart: The Momentum indicator is trending upward, and the 20 SMA is advancing above longer-term averages, reinforcing bullish sentiment. A minor pullback to $3,271 could occur if overbought conditions trigger profit-taking.
- Outlook: The bullish trend is intact, but the overbought RSI suggests a possible pause near $3,100–$3,200 before targeting $3,400. A break below $3,100 could test $2,900, though this is less likely given current momentum.
Key Influences: Geopolitical tensions, including the Ukraine conflict and Trump’s trade war rhetoric, bolstered Gold’s safe-haven appeal. Powell’s dovish Jackson Hole speech, hinting at September rate cuts, weakened the USD, further propelling Gold. Strong institutional demand and expectations of looser monetary policy also supported the rally.
Dollar’s Downward Spiral: DXY Faces Pressure
The US Dollar Index (DXY) started the week strong, rallying after a robust US CPI report, but it faltered, dropping to the 97s by Friday, a ~2% decline. It’s currently trading near 97, reflecting weakness against major currencies like the Euro and Sterling.
Technical Analysis:
- Daily Chart: DXY is consolidating around 97, with support at 96.50–96.4 and resistance at 98.50–99.2. The RSI (~50) indicates neutral momentum, and the 50-day SMA is flattening, signaling indecision. A spinning top and doji pattern mid-week highlight tightening price action.
- 4-Hour Chart: The failed CPI-driven rally led to reversals, with the 20 SMA losing upward momentum. A break below 96.4 could confirm a medium-term downtrend, while a push above 98 may signal a short-term recovery.
- Outlook: DXY faces bearish pressure if rate cut expectations solidify. A drop below 96.4 could target 95, while resistance at 98 remains a hurdle for bulls.
Key Influences: Powell’s dovish Jackson Hole speech, signaling a potential September rate cut due to a weakening labor market (unemployment at 4.3%), crushed USD sentiment. The CPI-driven rally faded as markets focused on Fed policy and Trump’s trade tariff uncertainties.
Bitcoin’s Rollercoaster, Peaks and Profit-Taking
Bitcoin (BTC) reached a new all-time high of $124,474 earlier this week but then dropped 8% to $112,932 due to profit-taking. By August 24, it bounced back to around $115,700, down 1.9% for the week. Toward the end of the week, it surged to $117,300, fueled by $379.88 in short liquidations.
Technical Analysis:
- Daily Chart: BTC is consolidating above $111,980, a critical support. The 20-day SMA ($117,000) acts as resistance, with the 50-day SMA ($110,000) as deeper support. RSI (~45) is neutral, and bearish FVGs from $124,500 suggest potential retracement to $120,000–$123,000.
- 4-Hour Chart: Positive funding rates on perpetual futures indicate cautious bullish sentiment. Liquidity clusters at $115,000 (upside) and $111,000 (downside) suggest a breakout could trigger sharp moves. A daily close above $120,000 would signal a shakeout.
- Outlook: BTC needs to reclaim $120,000–$123,000 to target $125,000–$128,000. A break below $111,980 could test $106,000 (Fib 38.2%).
Key Influences: ETF outflows ($1.17B) and profit-taking pressured BTC, but Powell’s dovish speech sparked a $300M futures surge. Institutional interest, including BlackRock’s $104B crypto holdings and MicroStrategy’s $4,000 BTC purchase, supported sentiment. Trump’s pro-crypto policies also fueled optimism.
Ethereum surges to new all-time high following Powell’s dovish hints, eyes $6,000
Ethereum (ETH) reached a new all-time high on Friday, surpassing $4,868 for the first time since November 2021, according to Binance. This increase in Ethereum’s price follows comments by Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium. He suggested that changes in risks could lead to a shift in policy, hinting at a possible rate cut in the Fed’s upcoming meeting in September. Since July, Ethereum has risen more than 100%, and it has more than tripled in value since it was at $1,500 in early April.
Technical Analysis:
- Daily Chart: ETH is holding above the $4,240–$4,186 support zone, with resistance at $4,800–$5,000. The 20-day SMA ($4,500) provides support, and RSI (60) suggests room for upside. The price is within a bullish channel, with $4,000 as a deeper support.
- 4-Hour Chart: The Momentum indicator is bullish, and the 20 SMA is aligned above longer-term averages. A breakout above $4,800 could target $5,000, while a drop below $4,186 may test $4,000.
- Outlook: ETH’s strength points to a potential run to $5,000 if $4,800 breaks. Support at $4,186 is critical to maintain the bullish bias.
Key Influences: Powell’s dovish speech triggered a 12% daily surge, amplified by $2.91B in weekly ETF inflows, particularly BlackRock’s ETHA ($519.8 daily). Whale buying (e.g., 938,489 LINK for 4,806 ETH) and DeFi growth on Layer 2 solutions like Arbitrum boosted ETH’s appeal.
Powell fires up markets, but some investors see reason for caution.
Investors reacted positively to Federal Reserve Chair Jerome Powell’s speech at Jackson Hole, where he signaled that the central bank might be ready to cut interest rates. This raised hopes for buying riskier assets. However, investors remain cautious because they see potential stagflation risks and are concerned that the markets may be too optimistic.
In his final speech as Fed chair at the Jackson Hole economic symposium, Powell suggested a possible interest rate cut in September but did not make a firm commitment. He carefully balanced the risks of a weakening job market with ongoing concerns about inflation.
On Friday, the speech came as pressure from the White House grew to ease monetary policy. This raised concerns that political influence might push the US central bank to cut interest rates too aggressively in the future.
Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments, said, “Powell certainly confirmed that a rate cut in September is likely, and this certainty is positively affecting global markets. However, the question remains about what will happen after September, and I think the markets may be getting ahead of themselves.”
The address at Jackson Hole followed a weak jobs report for July and significant downward revisions to previous job figures. This led to increased expectations that the US central bank will cut interest rates later this year from the current range of 4.25%-4.5%.
Cryptocurrency markets surged on Friday after Federal Reserve Chair Jerome Powell indicated that interest rate cuts might happen soon. This news helped the Dow gain over 800 points, marking its first gain of that size this year. It also ended the Dow’s longest stretch without a new high since December 4, 2024, according to Dow Jones Market Data. This shift shows growing optimism for potential economic policy changes.
Market Impacts:
- Gold: Powell’s dovish tone crushed USD strength, propelling Gold to a new high above $3,333.10 as investors piled into safe-haven assets. The speech reinforced rate cut bets (90% probability for September, per CME FedWatch), amplifying Gold’s bullish momentum.
- DXY: The Dollar Index slumped to the 97s as markets priced in looser policy, reversing CPI-driven gains. Powell’s focus on labor market risks and downplaying tariff-driven inflation fears triggered a sharp sell-off.
- Bitcoin: BTC jumped 3% to $117,300 post-speech, with $585M in short liquidations fueling the rebound. The crypto market cap hit $3.95T, reflecting renewed risk appetite.
- Ethereum: ETH surged 12% to $4,810, leading altcoins with $1B in daily ETF inflows. Powell’s remarks boosted optimism for risk assets, with ETH benefiting from institutional flows and DeFi growth.
- Altcoins: Solana, XRP, and others rallied 5–8%, amplifying BTC’s move. Powell’s dovish stance shifted liquidity toward high-beta assets, though meme coins remained volatile.
Altcoin Frenzy: Stars Shine, Meme Coins Stumble.
Price Action: Altcoins outperformed Bitcoin, with Solana (SOL) up 1.07–4.5%, OKB soaring over 50% to above $250 due to a massive burn program, and XRP dropping 8% but holding $3.20. Meme coins like Dogecoin, Shiba Inu, and Pepe faced volatility, with bearish technicals signaling caution. The crypto market cap rose 5% to $3.95T post-Powell.
Technical Analysis:
- Solana (SOL): Bouncing from its 1-month MA50 ($190), with resistance at $200 and a target of $220. RSI (55) supports further upside.
- OKB: Breakout rally intact, with support at $230 and resistance at $270. Technicals suggest continued strength.
- XRP: Holding $3.02 support after a 3% drop; resistance at $3.05. A break below $3.05 could test $3.00.
- Meme Coins (DOGE, SHIB, PEPE): Bearish technicals with declining on-chain interest. Support levels are fragile, with $0.50 (DOGE) and $0.00003 (SHIB) at risk.
- Outlook: SOL and OKB lead the altcoin rally, but meme coins face downside risks due to volatility and ETF outflows.
Bottom Line
This week, Jerome Powell’s speech at Jackson Hole impacted the markets, causing prices for Gold and Ethereum to rise while putting pressure on the US Dollar Index (DXY). Gold hit record highs above $3,333.10 due to a weaker dollar and increased safe investment demand. Ethereum reached a new all-time high of $4,868 with hopes of hitting $6,000, driven by ETF inflows and growth in DeFi. Although Bitcoin saw some profit-taking, it remained above $115,700. Altcoins like Solana and OKB did well, but meme coins struggled. With a 90% chance of rate cuts and concerns about stagflation, watch for signals from the Federal Reserve and geopolitical tensions for future market movements.
