Bitcoin hit a record. Gold rose on safe haven demand walking into the Federal Reserve (Fed) Chair Jerome Powell’s testimony before the Congress. Powell is expected to ask policymakers for patience before cutting interest rates. Even though higher yields – that would result from a hawkish shift in Fed expectations – are not favourable for the valuation of gold, the size and the amplitude of a potential market selloff could help investors look past the higher opportunity cost of holding the non-interest-bearing gold and push the price of an ounce further up.
US major indices were down yesterday, as Apple got hit by additional unpleasant news that its iPhone sales in China fell 24% over the first six weeks of the year. The stock fell and closed below a key technical level: the major 38.2% retracement on the bullish trend forming since the beginning of 2023. Technically, the stock has now stepped into the medium-term bearish consolidation zone.
Elsewhere, the Bank of Canada (BoC) is expected to keep its policy rate steady today and the UK Chancellor of the Exchequer will reveal the budget. He is expected to aim for tax cuts to please British voters, but he has a limited margin and some tax cuts could lead to inflationary pressures prompting the Bank of England (BoE) to maintain a tighter monetary policy for an extended period, which may further burden mortgage payers. Hunt should find a fine balance.
