Crypto-Commodity is a phrase being thrown around as people ask the question is Bitcoin now as good as Gold? We discuss the latest with Gold and the online currency with Craig Erlam, Senior Market Analyst, for OANDA.
Gold is out of favour at the moment; this is due to a couple of circumstances. Dollar has shown some strength recently, and with the yellow metal being denominated in Dollar, it is very susceptible to Dollar performance. We have also seen the US Tax reform bill, with a joint committee being drawn up between the Senate and the House to amalgamate the bills to try and pass through both chambers. Which has helped support the dollar, further weighing on Gold.
Improvement in Risk appetite is typically bad for Gold. We can see a sideways trend between 1260 and 1300 since late September. Currently testing 1260 again, with momentum built up to the downside. Previous support zone combining with 200SMA & 300SMA. Should we see a break of 1260, would signal a bearish trend. Possibly down to 1240 level. We wonât see a big drop off in gold as there are a lot of elements bubbling away and we are unlikely to see a massive resurgence in the dollar.
But Is Bitcoin as good as gold? Craig Erlam says that it is not, at least not yet, but he believes that it could be. There are a couple reasons behind his thinking; one major factor being if Bitcoin becomes a new reserve currency in the long term. This could cause it to become a new replacement for gold. However Bitcoin will never have the intrinsic value. There are many sizeable hurdles for Bitcoin in the future that it has to jump before it can consider taking that mantle.
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