Gold and Bitcoin Experience Significant Pullback as Feds Hawk King Hints at Slowing Rate Cuts Blinken Visits Middle East to Promote Ceasefire Prior to November Election

Coin World Report:
On Tuesday, October 22, 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, reaching a low of $66,580. Hawkish Federal Reserve officials, including Neel Kashkari, president of the Minneapolis Federal Reserve and known as the “hawk king,” predicted that the pace of interest rate cuts would slow down in the coming quarters, and other officials 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 visits the Middle East to push for a Gaza ceasefire; 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 was unsuccessful, and the conflict 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 leader supports 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, claiming that it used customer deposits to fund attacks against Israel.
On Sunday evening, at least 15 branches of the “Sacred City Brigades” were attacked in southern neighborhoods of Beirut, southern Lebanon, and the eastern Bekaa Valley, where Hezbollah is strong. One attack flattened a nine-story building in Beirut that housed a branch of the institution.
The Israeli military issued evacuation warnings before the attack, and there are currently no reports of casualties. AP News reporters witnessed the attack in the Uzay coastal area near Beirut Airport on Monday evening. The Lebanese Ministry of Health said that an airstrike near the largest public hospital in Beirut killed four people, including a child, and injured 24 others. This is the first attack on the capital of Lebanon in 10 days.
White House spokesman said on Monday that US President Biden is “deeply concerned” about the unauthorized release of classified documents regarding Israel’s preparations for retaliatory attacks on Iran.
White House National Security spokesman John Kirby said that the Biden administration is still uncertain whether this classified information has been leaked or hacked. He said that there is currently no indication that “other similar documents 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 are deeply concerned, and the president is deeply concerned, about the possibility of any classified information leaking into the public domain. This should not happen, and once it happens, it is unacceptable,” Kirby said.
These documents belong to the US National Geospatial-Intelligence Agency and the National Security Agency, and the documents indicate that Israel is still mobilizing military assets to prepare for military strikes against Iran’s fierce ballistic missile attacks on October 1. These documents can be 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 documents and first appeared on the Telegram communication application last Friday, and quickly spread in Telegram channels favored by Iranians.
Hawkish Federal Reserve officials emerge, US dollar index challenges 104
Kashkari said 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 the rate cuts in future meetings are expected to be smaller. He reiterated that he supports gradually lowering interest rates in the coming quarters.
He said, “Currently, I predict that interest rates will be further reduced by a small margin in the next few quarters to reach a neutral level, but this will depend on the data.” He refers to the level of interest rates that neither stimulate nor restrict the economy.
He said that in order to take faster action, he needs to see “real evidence that the labor market is rapidly weakening.”
Policymakers made the first interest rate cut since the outbreak of the pandemic at the meeting last month, reducing interest 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 the inflation rate in September is also higher than expected. The market currently expects that the central bank may cut interest rates by 25 basis points at the meeting from November 6th to 7th.
Kansas City Fed President Jeffrey Schmiede said that due to the uncertainty about how low the Fed will eventually cut interest rates, he tends to slow down the pace of rate cuts.
In his first public speech since August, Schmiede said that he hopes the Fed’s policy cycle will “normalize” 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 help the Fed find the so-called neutral level, that is, a policy that will neither drag down nor stimulate the economy.
He continued, “If there are no major shocks, I am optimistic about achieving such a cycle, but I believe that a cautious and gradual policy approach is needed. Although I support reducing policy restrictions, I tend to avoid taking excessive measures, especially considering the uncertainty of the ultimate goal of the policy and the financial market turmoil I want to avoid.”
“My understanding is that what we are seeing is a form of normalization, not a serious deterioration of the situation.” He added that employers no longer feel the need to hoard workers as they did after the outbreak of the pandemic, and the enthusiasm for recruitment has also declined. He said, “As employers make these adjustments, all of this will at least temporarily suppress the weakness of the labor market.”
The US dollar remained stable and challenged the 104 mark, rising slightly due to the escalation of geopolitical tensions in the Middle East and supportive comments from Federal Reserve officials. However, profit-taking has suppressed the rise of the US dollar as investors have reacted to China’s positive economic data and the government’s economic stimulus plan.
Economic activity data in the S&P report released on Thursday, as well as the data in the Federal Reserve’s beige book on Wednesday, may have an impact on 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 stated that the US dollar index faces resistance at the 200-day simple moving average (SMA). Although it has rebounded, the momentum may not be enough to overcome the resistance.
The relative strength index (RSI) and the moving average convergence divergence (MACD) are both flattening in the positive zone, indicating a pause in buying momentum, and the latter is still in the overbought zone.
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 price of gold 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 the overbought zone, 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 that it is now entering a consolidation and retesting support stage. Well-known trader Jelle wrote in his latest Twitter post, “As expected, there is a slight sell-off in the market today, but it’s okay, the weekly chart is ready.”
Price predictions include deeper retracements, and well-known opinion leader Emperor hinted 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, where shorts will take profits, and they should.”
Emperor also focuses on the 200-period exponential moving average (EMA) within the 6-hour time range, which is currently around $63,300.
Trader, analyst, and commentator Rager continued to state, “The trend is the meme, mainly self-fulfilling prophecy, but the middle and bottom of the trend actually played an important role in Bitcoin’s rebound. Before further upward movement, pay attention to potential retests.”
Meanwhile, well-known commentator WhalePanda expressed frustration with the reaction to Bitcoin’s attack at $69,000. “Once again, the US impressively sold $2,000, I really want to know where they get Bitcoin every day to sell,” he responded.
The latest data from monitoring resource CoinGlass shows that as buyers’ interest in Bitcoin near $66,000 increases, Bitcoin is eating away at buyer liquidity.
By analyzing the liquidity conditions of the world’s largest exchange Binance, trading resource company Material Indicators described Bitcoin as “flashing buy.”
In another discussion, Keith Alan, co-founder of Material Indicators, emphasized that the candle needs 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 selling liquidity above $70,000, but don’t ignore the importance of the historical and technical resistance at the ATH area. We may see some highs, but I don’t expect a continued rise to the ATH area without a candle chart above $69,000.”