Key points about Gold and Bitcoin
Concerns about rising U.S. public debt and the prospect of a significant deficit are increasing, driving yields, gold prices, and bitcoin up.
Gold faces little resistance from the current level up to the record high around $3,400.
The upward trend of Bitcoin remains stable after a gradual correction in Q1, and a breakout to record highs could quickly lead to levels of $115,000 or even $120,000 in the short term.
After weeks of the market being affected by international trade news, this week the impacting factors are simply clearer: Higher than expected inflation in countries like Canada and the UK is reducing expectations for central banks to cut interest rates, and the ever-changing outlook of the U.S. budget bill currently under consideration in the legislature.
Focusing on the "Big, Beautiful Bill", the U.S. House of Representatives is facing an important vote on Donald Trump's budget package, with House Speaker Mike Johnson expected to hold the vote today.
However, the key elements of the bill, including the final changes, are still under negotiation. At the time of writing, the House Rules Committee is in a lengthy session to finalize the manager's amendment, which is crucial to securing support from hesitant Republican members.
The bill, a key part of Trump's broader agenda, has faced opposition, particularly from conservative and moderate Republican lawmakers. The main points of contention include work requirements for Medicaid recipients and green energy tax credits, with conservatives pushing for faster implementation of these provisions.
Meanwhile, moderate Republican lawmakers, particularly from high-tax states, are still standing firm on the state and local tax (SALT) deduction limits, calling for a higher limit than what is currently proposed, although news this morning suggests a possible agreement to raise it to $40,000.
House Speaker Johnson remains committed to an ambitious agenda, with discussions expected to continue throughout the week as Republican leaders work to narrow internal disagreements. Former President Trump is expected to be present in Congress to rally more support, especially targeting skeptical Republican lawmakers.
More notably for investors, market concerns about the rising public debt of the U.S. and the prospect of prolonged budget deficits are becoming increasingly evident. The Treasury bond market has recorded high volatility, with yields rising sharply, partly in response to the proposed tax cuts in Trump's economic plan. Bond investors are increasingly concerned about the long-term effects of this bill, especially in the context of the current very high public debt.
In this context, assets considered as "alternative currencies" like gold and bitcoin have recorded significant price increases, benefiting from a sentiment of distrust towards traditional financial instruments. Below is a detailed technical analysis for both of these key asset types:
Technical analysis Gold: Daily chart XAU/USD Source: TradingView, StoneX
Focusing on gold first, the metal is recovering from the 50-day Exponential Moving Average (EMA) this week, similar to the corrections seen at this important dynamic support level throughout the year. At this point, there are not many obstacles to resistance between the current price level and the all-time closing high near $3,400, suggesting the potential for continued growth from here.
Buyers still hold an advantage as long as gold can maintain above the 50-day EMA and the previous support level around $3,150, which was once a resistance level.
Technical analysis Bitcoin: Daily chart BTC/USD
Source: TradingView, StoneX
After reaching an all-time "closing" high yesterday (with the closing level considered a metric in the context of 24/7 trading assets like Bitcoin), Bitcoin continues to extend its growth momentum, approaching a daily record level of $109,362 today.
Overall, the upward trend of Bitcoin remains very strong after a slight correction in Q1, and a strong breakout to record highs could quickly lead to a continuation towards $115K or even $120K in the short term as momentum traders join this breakout. Currently, the short-term trend still leans bullish as long as Bitcoin remains above last week's low near $101K.
