Gold prices blasted through $2,300 per troy ounce during the middle of this week. Much of this jump was driven by a spike in fears about escalating conflict in the Middle East. As geopolitical uncertainty feeds investor fears, more and more investors are looking to gold, the original safe haven asset. This increase in value is characteristic of a long established trend of how geopolitical instability tends to affect the markets of precious metals.
Coincidence or not, on that same day, Bitcoin turned heads, reaching an all-time high of almost $109,500. The contangoed crypto made additional headway after building on Tuesday’s surge, underscoring both its incredible volatility and increased penetration into the mainstream investor complex. The digital asset’s meteoric ascent is a testament to a fundamental shift in market sentiment. More people and organizations are starting to see cryptocurrencies as a potential investment asset.
On FX markets, the euro/us dollar exchange rate completed its weekly bullish streak far beyond the 1.1300 EUR/USD threshold on Wednesday. The US Dollar is certainly under massive pressure by the bit economic indicators and largely by the dot gu pictures uncertainties. This continued relative underperformance has resulted in strong market beats to the upside. The euro has had the benefit of a strongly declining dollar, creating a positive backdrop for it to appreciate against the greenback.
At the same time, the AUD/USD currency cross completely reversed Tuesday’s setback, scoring impressive Wednesday gains. Specifically, the Australian dollar headed toward its key 200-day Simple Moving Average (SMA) at around 0.6460. Whether it holds or not, today’s rebound is a testament to the sustained selling pressure on the US Dollar. Analysts say there is weak support for AUD/USD at the 0.6350 level. This support can provide a buffer against unpredictable market shocks.
The intertwined nature of gold, Bitcoin, and the DXY/major currency pairs exemplifies the complexity of today’s capital markets. As geopolitical tensions escalate, investors are flooding into traditional safety assets such as gold. Simultaneously, they’ve been seeking new revenue streams in upstart markets – most notably, the world of cryptocurrencies.