Gold and Bitcoin experience significant pullback as Federal Reserve hawk hints at easing pace with Blinken traveling to the Middle East to promote ceasefire ahead of November election

CoinJewel.com Report:
On Tuesday (October 22nd), the US dollar index remained strong at 103.96, continuing to challenge the breakthrough of 104. Gold fell to $2,723, and Bitcoin also corrected to $67,300, with a low of $66,580. Hawkish Federal Reserve officials have emerged, with Neel Kashkari, the president of the Minneapolis Federal Reserve and known as the “Hawk King,” predicting that the pace of interest rate cuts will slow down in the coming quarters, and other officials have expressed similar views. US Secretary of State Blinken went to the Middle East to push for a ceasefire in Gaza two weeks before the US election.
Blinken Goes to the Middle East to Push for a Ceasefire in Gaza, Israel Attacks Hezbollah Financial Institutions
Blinken left for the Middle East on Monday to push for a ceasefire in Gaza two weeks before the US election, seeing the killing of Hamas leaders by Israel as a new opportunity. This is the 11th visit to the Middle East by the highest-ranking US diplomat since the outbreak of the war a year ago.
During his last visit to Israel in August, Blinken warned that this could be the “last chance” for the US-led ceasefire plan. However, this effort did not succeed, and the conflict has since escalated and expanded, with Israel launching fierce attacks on Hezbollah targets in Lebanon and warning of new direct strikes against Iran, as Iran’s religious leaders support both Hamas and Hezbollah.
According to the Associated Press (AP News), Israel announced on Monday evening that it plans to launch more attacks on a Hezbollah-controlled financial institution in Lebanon. Israel attacked the institution the night before and claimed that it used customer deposits to fund attacks against Israel.
On Sunday evening, at least 15 branches of the “Sacred City Brigade” were attacked in southern Beirut communities, southern Lebanon, and the eastern Bekaa Valley, where Hezbollah is strong. One attack leveled a nine-story building in Beirut that housed a branch of the organization.
The Israeli military issued evacuation warnings before the attacks, and there are currently no reports of casualties. AP News reporters witnessed the attacks in the coastal area of Uzai near Beirut airport on Monday evening. The Lebanese Ministry of Health reported that the airstrikes near Beirut’s largest public hospital killed four people, including a child, and injured 24 others. This is the first attack on the Lebanese capital in 10 days.
A White House spokesperson said on Monday that US President Biden is “deeply concerned” about the unauthorized release of classified documents regarding Israel’s preparation for retaliatory strikes against Iran.
White House National Security spokesperson John Kirby said the Biden administration is still unsure whether the classified information was leaked or hacked. He said there is currently no indication that “there are other similar documents that have entered the public domain.”
Kirby added that the US Department of Defense is investigating the matter. US officials confirmed on Saturday that the government is conducting an investigation. “We’re deeply concerned, the president is deeply concerned, about any unauthorized disclosures of classified information into the public domain. It’s not something that should happen, and when it does, it’s unacceptable,” Kirby said.
The documents belong to the US National Geospatial-Intelligence Agency and the National Security Agency, and they indicate that Israel is still mobilizing military assets in preparation for a military strike against Iran’s ballistic missile attack on October 1. These documents are shared within the “Five Eyes” intelligence alliance, which is composed of the United States, the United Kingdom, Canada, New Zealand, and Australia.
These documents are classified and first appeared on the Telegram messaging application last Friday, quickly spreading on Telegram channels popular in Iran.
Hawkish Federal Reserve Officials Emerge, US Dollar Index Challenges 104
Kashkari stated at an event in Wisconsin on Monday that he supported the decision-makers’ implementation of an abnormally large interest rate cut last month, but he said that he expected the rate cut to be smaller at future meetings. He reiterated his support for gradually lowering interest rates over the next few quarters.
He said, “I currently predict that interest rates will continue to be slightly reduced in the next few quarters to reach a neutral level, but this will depend on the data.” He referred to a level of interest rates that neither stimulates nor restricts the economy.
He said that in order to take more rapid action, he needs to see “solid evidence that the labor market is rapidly weakening.”
Policymakers made their first interest rate cut since the outbreak of the pandemic at last month’s meeting, reducing rates by 50 basis points.
Since that meeting, economic data has shown that hiring in the past three months has been stronger than previously expected, and inflation in September has been higher than expected. The market currently expects the central bank to reduce rates by 25 basis points at the meeting on November 6th to 7th.
Kansas City Fed President Jeffrey Lacker said that given the uncertainty about how low the Fed should ultimately lower interest rates, he tends to slow down the pace of rate cuts.
In his first public speech since August, Lacker said that he hopes the Fed’s policy cycle can be “normalized” so that the Fed can make “moderate” adjustments to maintain economic growth, price stability, and full employment. He said that slowing down the pace of interest rate cuts will also enable the Fed to find the so-called neutral level, where the policy will neither hinder nor stimulate the economy.
“I understand that what we see is normalization, not a significant deterioration in the situation,” he added, saying that employers no longer feel the need to hoard workers as they did after the outbreak of the pandemic, and the enthusiasm for hiring has also declined. He said, “As employers make these adjustments, all of this will temporarily suppress labor market weakness.”
The US dollar remained stable and challenged the 104 level as tensions in the Middle East escalated and supportive comments from Federal Reserve officials led to a slight increase. However, profit-taking has curbed the rise of the US dollar as investors react to positive economic data and government stimulus plans in China.
The economic data in the Standard & Poor’s economic activity data released on Thursday, as well as the data in the Federal Reserve’s Beige Book released on Wednesday, may affect the US dollar.
The market continues to bet on the possibility of two more interest rate cuts in the remaining time of 2024.
US Dollar Technical Analysis
FXStreet analysts state that the US dollar index is facing resistance at the 200-day Simple Moving Average (SMA). Although there is a recovery, the momentum may not be enough to overcome the resistance.
The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are both flattening in the positive zone, indicating a pause in buying momentum, and the latter is still in overbought territory.
Therefore, the index may have difficulty returning to the 200-day SMA and may consolidate in the short term.
Gold Technical Analysis
FXEmpire analyst Vladimir Zernov stated that the gold price once tested new highs, but then lost momentum and fell back as traders took profits after the strong rise in gold prices.
The RSI is still in overbought territory, so the risk of a pullback is increasing.
Bitcoin Technical Analysis
CoinTelegraph pointed out that as Bitcoin reached its highest weekly closing price in five months, market observers believe it is now entering a consolidation phase and a retest of support is needed. Renowned trader Jelle wrote in his latest tweet, “As expected, the market is selling off slightly today, no problem, the weekly chart is ready.”
Price predictions include deeper retracements, and prominent opinion leader Emperor suggested that $62,000 may reappear. “The high-volume range between H6 55EMA and $66,000-$65,000 should be a support area worth paying attention to, and shorts should profit here, and they should.”
Emperor also focused on the 200-period Exponential Moving Average (EMA) on the 6-hour timeframe, which is currently around $63,300.
Trader, analyst, and commentator Rager continued, “Trend is a meme, mainly self-fulfilling prophecy, but the mid and bottom of trends have actually played an important role in Bitcoin’s rebound. Look for potential retests before further gains.”
Meanwhile, prominent commentator WhalePanda expressed frustration with the reaction to the attack on Bitcoin at $69,000. “Once again, the US impressively sold off $2,000, I really want to know where they get Bitcoin from to sell every day,” he responded.
According to the latest data from monitoring resource CoinGlass, Bitcoin is eroding buyer liquidity as interest in buying near $66,000 increases.
By analyzing the liquidity situation of Binance, the world’s largest exchange, trading resource company Material Indicators describes Bitcoin as “bargain hunting.”
In another discussion, Keith Alan, co-founder of Material Indicators, emphasized the need for a full candle to close above $69,000 for bulls to have a chance to challenge the historical high in March. He wrote, “There is indeed a lot of sell liquidity above $70,000, but do not ignore the importance of historical and technical resistance of the ATH area. We may see some highs, but I don’t expect a continuous rise to the ATH area without a candlestick above $69,000.”