- Summary:
- Gold price is under a lot of pressure in part because of the surging demand for Bitcoin by institutional investors. What next for the metal?
Gold price is set to decline further as more institutional investors shift to Bitcoin and other better-performing digital currencies. That is according to analysts at JP Morgan, America’s biggest bank. As of 08:30 GMT, the price of gold is trading at $1,835, which is 6.60% lower than the YTD high of $2070. Bitcoin price is up by 1.30% to $18,447.
In a report cited by Bloomberg, the analysts said that the biggest concern for gold is that many institutional investors have decided to shift their financial resources to BTC. This includes many high-profile companies like Square, PayPal and MicroStrategy.
Indeed, in the past few months, gold ETFs have seen a sharp decline in assets by about $7 billion while the GrayScale Bitcoin Trust has risen by more than $2 billion. They wrote:
“If this medium to longer-term thesis proves right, the price of gold would suffer from a structural flow headwind over the coming years.”
This view isn’t new. Indeed, I wrote about the rotation from gold to Bitcoin a few weeks ago.
This explains why the price of gold has fallen even as the US dollar has dropped to the lowest level since 2018.
Gold Price technical outlook
Turning to the four-hour chart, we see that gold price is under pressure. In the past few days, it has moved from a high of $1,875 to the current $1,835. This price is also slightly below the 38.2% Fibonacci retracement level and the 25-period and 15-period moving averages. Therefore, at this point, the path of least resistance for the metal is lower, with the next main target being at $1,800.
Gold price technical chart
