The US housing market showed weakness and the October US inflation rate was weaker than expected. Analysts estimate that these economic trends helped push the price of gold up 3.81% against the greenback on November 10, 2022, after the release of the consumer price index (CPI) of October by the US Bureau of Labor Statistics.
So far, gold’s market performance in November has outpaced that of bitcoin.
Bitcoin has seen better days, as the main crypto asset lost more than 18% of its value as of November 1. Much of the crypto asset’s dollar losses can be attributed to the collapse of FTX and the chaotic aftermath that followed.
The ounce of gold, meanwhile, rose 6.12% from its trading price on November 1, 2022. On that day, the spot value of one troy ounce of 999 fine gold was nominal US$1,647.50. Today, the value of one ounce of fine gold (999 thousandths) is approximately $1,748.49.
Analysts and economists attribute part of gold’s success over the past two weeks to falling US home sales. The National Association of Realtors (NAR) reported that on Friday that “existing home sales fell 5.9% in October“.
“Existing home sales fell for the ninth consecutive month to a seasonally adjusted annual rate of 4.43 million. Sales fell 5.9% from September and 28.4% from a year earlier“, details the report of the NAR. The NAR study further attributes the fall in house prices to aggressive rate hikes by the Fed which have significantly increased the 30-year borrowing rate this year.
Most of gold’s rise began on November 1, 2022, and it rose further after the US Bureau of Labor Statistics released a report on employment developments. The consumer price index (CPI) for October. The drop in the inflation rate caused the price of gold to rise 3.81% against the US dollar between November 10 and November 13, 2022.
The report also helped bitcoin to some extent, as the effect of FTX’s collapse on crypto markets could have been worse had the inflation rate been higher. BTC’s 1-hour candle after the CPI report surged.
On November 10, the price of an ounce of gold stood at $1,706 per unit and on November 13, 2022, it was trading at $1,771 per ounce. Frank Cholly, senior market strategist at RJO Futures, told Kitco News that gold may have climbed too fast and the precious metal is simply taking a break.
“Gold came close to $1,800. And now the market is seeing profit taking. It looks like he’s turning around. I’m not ready to be bearish just yet. We take a little rest“, explained Mr. Cholly on Friday. However, there is a point where Cholly could turn bearish, as RJO Futures’ senior market strategist noted:
If gold closes below $1750, I would start bearish – At $1725 things turn bad for gold.
Much like bitcoin proponents betting on the event of the bitcoin halving to bolster the value of gold, gold proponents are trying to find a solution. Gold diggers believe the price of gold will be much higher over the next eight years. Primexbt.com traders believe gold will hit $4,721 per ounce by 2024 and by 2030 traders expect gold to hit $8,732 per ounce.