On Wednesday (November 13), the US dollar index rose to 105.96, while gold prices fell to $2598. Neel Kashkari, the president of the Minneapolis Federal Reserve, regarded as the "Eagle King," warned that any unexpected inflation could lead the Fed to pause interest rate cuts in December, resulting in a shift in dovish pricing. Billionaire Elon Musk hinted that Congress may pass several bills to curb excessive government power before Trump's inauguration. The "Trump trade" took effect, with Bitcoin approaching the $90,000 breakthrough, reaching a high of $89,929.
Musk: The US Congress will pass several bills to curb excessive government power.
Kentucky Congressman Thomas Massie tweeted: "The new Congress will start on January 3, but President Trump won’t take office until January 20. With the House and Senate having a majority, we should at least have a dozen bills aimed at curbing excessive government power waiting on his desk for his signature on his first day in office."
Musk subsequently retweeted the post, emphasizing: "Long live Government Efficiency."
Before the election, Trump promised to establish a Government Efficiency department, which would be led by Musk. Since the department's English abbreviation is DOGE, similar to Dogecoin (DOGE), it also boosted the meme coin market.
Dogecoin surged nearly 20% on the news, approaching the $0.4 mark.
"Eagle King" Kashkari: The Fed may pause interest rate cuts in December.
Kashkari stated that if inflation unexpectedly rises before December, the Federal Reserve may reassess the necessity of interest rate cuts at the December meeting. He believes that the US labor market is performing strongly, and the economy shows robust resilience, but the key factor remains whether inflation will affect the Fed's future policy path. His remarks highlight the Fed's close attention to inflation trends and suggest that the Fed may adjust policies based on data.
He continued to point out that, although the Fed has many reasons to be confident in its long-term fight against transient inflation, it may be too early to declare complete victory. The key US Consumer Price Index (CPI) data expected to be released mid-week is anticipated to show a slight increase in annual overall inflation data.
He stated: "The resilience of the US economy continues to surprise me. The strong labor market and robust economy seem likely to persist. The Fed will not model the impact of Trump's policies on the economy until it becomes clear. Tariffs are one-time price increases that do not in themselves cause inflation. I do not want to declare that we have conquered inflation, but we have ample reason to believe we are capable of tackling inflation."
"Given the dynamics of the housing market, it may take one or two years for the inflation rate to fall to 2%. A strong labor market is encouraging, and the economic situation looks strong. If inflation unexpectedly rises before December, we may pause this plan. In a higher productivity environment, the neutral interest rate is higher, meaning there is less room for the Fed to cut rates."
"Our limits are moderate. The threshold to stop the Federal Reserve's balance sheet reduction is quite high. The Fed has a long way to go before stopping the reduction of its balance sheet."
The US dollar index continues to rise as expectations shift regarding the Federal Reserve's easing.
Expectations for Fed easing have shifted, with the market anticipating only a 70% probability of further rate cuts after December.
The swap market estimates the probability of a rate cut in December at around 50%, showing a significant change compared to September's pricing.
The market currently expects overall easing policies to be between 75 to 100 basis points within the next 12 months.
In addition, investors expect the terminal rate to be close to 3.5%, up from 2.5% in September, and Fed officials may strengthen their cautious tone this week.
US dollar technical analysis
FXStreet analyst Patricio Martín stated that the US dollar index indicator is in a positive range, but the Relative Strength Index (RSI) is nearing 70. The index is close to overbought levels, indicating a potential pullback or consolidation in the short term.
However, the overall technical outlook remains bullish, with indicators showing potential for further upside.
If a correction occurs, the 105.00-105.50 level may be used as support to consolidate gains.
Gold technical analysis
FXEmpire analyst Bruce Powers stated that gold continued its bearish retracement trend on Tuesday, hitting a new low of $2590, and subsequently encountered short-term support. During the decline, two key price indicators were breached, namely the internal upward trend line and previous volatility lows, which were also the monthly lows.
Gold's closing seems likely to be weak, appearing red and below the trend line. A daily closing price below the trend line increases the likelihood of a retracement to the previously broken level of around $2532. Additionally, a daily closing price below the monthly low of $2602 would be a bearish signal.
Two weeks ago, gold hit a new high of $2790. It then quickly retraced, and this has continued to the present. The weekly pattern is the evidence. That week closed with a bearish reversal doji (not shown), triggering a bearish signal last week. This week marks the second week of decline, with no signs of reversal.
Gold is experiencing a waterfall decline, and it will certainly test lower prices before it ends. Bearish sentiment has recently been reflected as the 20-day moving average has recently fallen below the 50-day moving average, which it has been above since July 3. Furthermore, a daily closing price below the monthly low of $2602 could extend the adjustment.
Monthly price patterns are significant because they affect shorter time frames. Today marks the first time in nine months that gold prices have broken below the previous month's low. Since March, gold prices have been rising, with monthly lows and highs continuously increasing. Today, this pattern was broken, and if a breach of this pattern continues to be confirmed, it could lead to a deeper and longer adjustment in gold prices.
If gold prices continue to face downward pressure, it is very likely to reach the price range of $2532. Another mid-term price range worth noting is around $2557 to $2551, which includes the 20-week moving average and the 127.2% extension target of the intraday descending ABCD pattern. The 20-week moving average is a potentially important support area, as it last marked support in early August. Since October 2023, gold trading prices have generally been above this level.
Bitcoin technical analysis
FXEmpire analyst Ibrahim Ajibade stated that MicroStrategy purchased $2 billion worth of Bitcoin on Monday, which reignited bullish optimism and laid the groundwork for Bitcoin potentially rising to the psychological barrier of $100,000.
Bitcoin surged over 33% in the past week, breaking through the $90,000 mark on November 12. Technical indicators show that Bitcoin prices still have further upside potential.
The Bollinger Bands on the chart have expanded, reflecting increased volatility, while the daily candlestick chart is above the upper Bollinger Band, indicating that the upward trend will continue.
Meanwhile, the Bull-Bear Power Indicator (13) shows a positive trend, indicating that despite a double-digit increase on the weekly chart, bullish momentum remains strong.
If this bullish momentum continues, Bitcoin could further rise to the milestone $100,000 level in the coming days.
On the downside, immediate support is around $85,000, with additional support near the 20-day moving average at $73,117. However, as there are no signs of decreased demand for Bitcoin, the likelihood of a pullback seems low. As long as these support levels hold, Bitcoin's path toward $100,000 remains solid, attracting buyers hoping to take advantage of the next round of rebounds.
