Thanks to the forecast of Frank Holmes, CEO of US Global Investors, that the gold market is forming a bottom that Bitcoin is benefiting quite a lot. At the moment, Bitcoin price is trading around $ 10,608, up slightly over the past 24 hours. This is probably due to the positive correlation between these two asset classes.
An upbeat forecast for gold is driving the Bitcoin price up equally
At the same time, the analyst maintains his bullish target for gold at $ 4,000 by 2020 despite concerns about the uncertainty surrounding the November US election and the secondary Coronavirus stimulus package. two.
Holmes said:
“The bottom that you’re seeing in gold is like a perfect Miami beach bottom. Gold will go up and it will go down, the DNA of volatility you can measure over 20 trading days, 60 trading days, 12 months, it was up when we talked about time for a correction in at the beginning of August three standard deviations over 20 trading days. It’s now down one standard deviation.”
Gold continues its efforts to regain an all-time high above $ 2,000 amid high take-profits and a new bid against the risk-resistant US dollar. But Holmes expects demand for the precious metal to increase during a series of festive seasons around the world.
Gold has slipped 8.88% from its all-time high | Source: TradingView
Usually, Indian weddings peak after October every year. This increases the price of jewelry and jewelry made of gold. Furthermore, the Hindu Diwali festival increases demand during October and November. This connection also increases during Christmas and Chinese New Year.
Holmes said:
“It’s an auspicious time for the consumption of gold, and it’s most highly correlated with GDP per capita growth.”
US presidential election event
The expected demand for physical gold and its potential impact on futures stocks offset the risks posed by the US presidential election.
The gold, Bitcoin, and stock markets reacted negatively to President Trump’s tweet. Specifically, he threatened to reject the election results if Democratic rival Joe Biden won.
Trump suspects there is an event of voter fraud, leaving investors to grapple with the prospect of higher volatility around the election. As a result, some of them turn to cash safety, reducing risky assets. As a result, Bitcoin and gold are almost parallel.
Bitcoin lags gold moves | Source: TradingView
But gold has recently become a leading indicator for cryptocurrencies. The rise/fall of XAU/USD usually follows a similar price action in BTC/USD. It shows the trend of the Bitcoin traders towards gold, as gold acts as a marker to measure the risk appetite of investors.
If Holmes is right about the $ 4,000 price target for gold, then that could also be true for Bitcoin, especially in pursuit of an uptrend. That means a breakout above $ 12,500, the crypto level has been unable to break its uptrend throughout 2020.
You can see the Bitcoin price here.
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