The gold market could be at a key juncture as prices have seen some declines this week. The market is just under the $1800 level at lunchtime Friday, making it likely the bulls go into the long holiday weekend under serious pressure. The close below the $1800 level today could be indicative of further declines ahead as technical and momentum traders jump on board. The bulls have put up a great fight thus far, however, and could look to take prices higher again in short order to retake the $1800 level.

The $1800 and $1900 levels have been technically significant for weeks now. The gold market has been stuck in neutral territory for a few months now. Neither the bulls nor the bears have been able to produce a sustainable move above or below these key areas. Should the bears gain momentum when trading resumes next Tuesday, the bulls will need to look out as prices could possibly embark on a fresh and significant leg lower.

Should the gold market rebound early next week, however, the stage would be set for additional time in its recent trading range. The bulls have a lot to prove at this point and will need a breakout and close above the $1900 level to attract further buying interest. Until that occurs, the market could remain sideways and be stuck in neutral.

                                                                                                                                                                                             Source: investingcube.com

Global central banks appear willing to accept a recession at this point. Recent commentary from Fed Chairman Jerome Powell seemingly suggests that the Fed is willing to slow growth and even put the economy into recession in order to get inflation under control. Inflation has shown some signs in recent weeks of possibly peaking, although it is too early to tell if price pressures will begin to ease or not. The Fed appears, at this point in time, ready to continue its plans for policy tightening.

The Federal Reserve recently sent a message to markets with its surprise 75-basis point rate hike. A hike of 50-points was widely expected, but now the Fed has shifted expectations and could continue to implement larger-than-expected hikes to combat inflation. Markets are pricing in another 75-point hike at the next FOMC meeting, although beyond that market expectations become far less clear.

As markets await more clarity from the Fed, and likely more action, they will also assess whether the economy is headed into a recession or is simply slowing. Fears of a recession could keep pressure on stocks and risk assets while fueling buying in gold and perceived safe havens. The Fed, as it often does, is quite likely to screw up and could take things way too far. Chairman Powell acknowledged this during the last week. Powell suggested that allowing inflation to run would be far riskier for the economy than a recession. Inflation could become entrenched if not addressed now, he argued, as he said the Fed could in fact go too far in its rate-hiking campaign. The failure to restore price stability could become a long-term failure whereas a recession would almost certainly last just a short time.

The trading week also marked the beginning of the second half of the year and the end of the first. As investors look to tackle the second half of the year, they are likely to do some significant portfolio reshuffling. This reshuffling can make it even more challenging to determine the way the market may move in the coming weeks. It could also possibly benefit gold, however, as an increasing number of investors may look to add asset classes to fight or hedge inflation risks.

The portfolio adjustments to be made in the next few weeks could also give cryptocurrencies a boost. Currencies such as Bitcoin have taken a beating in recent months, with Bitcoin having its worth monthly showing ever in June. Now under the key $20,000 level, Bitcoin may become far more attractive for investors and could even be utilized to hedge against price pressures in the second half of the year.

If your time horizon for buying cryptocurrencies is short, such as a week, a month, or even a year, you should expect more volatility. If you are a long-term investor, however, you may now have the opportunity to seize more crypto at what could become rock bottom price levels.

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