(Kitco News) – Cryptocurrency and stock prices trended higher on Monday while gold bulls fought to climb out of an early hole ahead of a week filled with closely watched data points, including the latest inflation figures and a key monthly jobs report.
Market watchers will be closely monitoring the latest figures for clues about what the Fed will do in November regarding interest rates, though it is widely anticipated that they will cut the benchmark rate by 25 basis points. Data provided by the CME FedWatch Tool currently puts the odds of such a cut at nearly 97%.
“US stock index futures were stronger across the board this morning, fighting back after a mixed close on Friday, and a generally poor performance last week,” said David Morrison, Senior Market Analyst at Trade Nation. “Investors were on edge ahead of the weekend as bond yields pushed higher and on concerns over the scale of Israeli retaliation against Iran for the latter’s missile attack earlier this month. It appears that Israel undertook a targeted attack on Iranian military sites while avoiding its energy and nuclear infrastructure. Crude oil fell sharply on the news, and we’re now seeing a relief rally across equities.”
Morrison highlighted that this week will see “the release of Advance Q3 GDP, the ADP Employment report, weekly Unemployment Claims, the Fed’s preferred inflation gauge Core PCE and Non-Farm Payrolls,” while next week’s important events include the U.S. Presidential election and Federal Reserve monetary policy meeting.
“The equity bull market is quite long in the tooth now,” he warned. “And it remains to be seen if this week’s updates act as a tailwind or headwind. The bulls should be encouraged by the general resilience across the majors, and 5,800 has held so far as support on the S&P 500, with no significant or protracted break below here so far.”
For gold, Morrison noted, “It has lost some of its upside momentum, but that should be expected given the size of the rally since mid-February.”
“Prices were lower in early trade this morning, but were trading comfortably above a line of support which is developing around $2,710,” he said. “If it can continue to consolidate above this support area then further gains look probable. At the same time, traders should consider the possibility of a significant pullback from current levels.”
“In bull markets, this type of move can be extremely painful as it drives out the weaker hands,” Morrison noted. “At the same time, it tends to help strengthen the underlying resolve of the more committed players and thereby form a strong base for a continuation of the rally, while resetting the MACD at lower levels. Silver’s price action is similar, with the first line of significant support coming in around $33 per ounce.”
At the time of writing, spot gold trades at $2,714.40/oz for a decline of 0.24% on the session.
Data provided by TradingView shows that Bitcoin (BTC) bulls looked to push higher in the early hours on Monday, briefly rallying to a high of $69,260 as they tested the level of bearish strength at resistance between $69,000 and $70,000.
BTC/USD Chart by TradingView
“Last week, the cryptocurrency market was dominated by a risk-off sentiment that saw the total crypto market capitalization fall from $2.4 trillion to $2.2 trillion,” noted Alex Kuptsikevich, chief market analyst at FxPro. “However, on Saturday, higher volumes led to a price recovery, bringing the market back to the $2.3 trillion valuation it started the week with. The sentiment index is at 72, having been in the 69-74 range for the past twelve days.”
“Bitcoin climbed to $68.4K, entering the range of the last six days,” he added. “Last week, the market corrected the October 10th-20th gains, potentially paving the way for fresh upside momentum. Fibonacci pattern extensions suggest a potential upside to $76K, but the $70K and $72K areas could be a notable obstacle on the way.”
Looking ahead to the month of November, Ryan Lee, Chief Analyst at Bitget Research, said their data shows a “70% confidence interval” that “BTC is expected to trade in the range of approximately $66,000-$75,000, and ETH in the range of $2,350-$3,200.”
He highlighted three main factors that will impact crypto prices: interest rate cuts, secondary market indicators, and ETF inflows.
“The next interest rate decision meeting is scheduled for November 7, with market expectations of a 25 basis point cut, potentially bringing rates to the 4.5%-4.75% range,” he noted. “Currently, the U.S. Dollar Index and Treasury yields are on the rise, but a rate cut would improve overall macroeconomic liquidity, potentially boosting crypto assets.”
“In September, CME's BTC open interest reached an all-time high, while BTC's implied volatility has been in a declining phase for several months,” he added. “However, the implied volatility of short-term options expiring soon has recently surpassed that of medium- to long-term options, signaling that the market is beginning to bet on an increase in crypto market volatility.”
And regarding ETF inflows, Lee underscored that “By the end of October, BTC ETFs saw a net inflow of $3 billion over two consecutive weeks and maintained continuous inflows over the past 11 trading days, with only one day showing a minor outflow. This pattern reflects sustained optimism from traditional Wall Street capital about the future of crypto assets, suggesting that BTC ETFs may continue to serve as a key channel for traditional investors to gain exposure to crypto in November.”
With Bitcoin now less than 7% below its all-time high, TradingView analyst Xanrox highlighted the high level of liquidity above $70,000, saying most traders expect its price to head lower.
“The most liquidity is around 70k - 73k,” he noted. “Over 100 billion dollars are ready to be liquidated! How is this possible? Most people have their liquidation price exactly around this level on their short positions on futures. They believe the market will go down, but as you know, liquidity can be a very sweet spot for whales.”
“From a technical perspective, Bitcoin is forming a bullish pennant, and we have a strong bullish Elliott Wave combo (impulse wave + zigzag wave (1+2)),” he added. “Wave 3 is in progress.”
“Bitcoin will most likely experience a massive flash pump; now it depends on whales - will they take the liquidity for their sell orders or let it be to push the price higher?” he concluded.
At the time of writing, Bitcoin trades at $68,550, an increase of 1.26% on the 24-hour chart.
