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Market News 【TOP1 Morning】Bitcoin price drops from all-time high; Gold eases as dollar strengthens on stimulus hopes

【TOP1 Morning】Bitcoin price drops from all-time high; Gold eases as dollar strengthens on stimulus hopes

Trump's social media bans are raising new questions on tech regulation; Cryptocurrency investors could 'lose all their money'; Dollar extends rebound as U.S. yields climb.

TOPONE Markets Analyst
2021-01-12
775

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E.U. and British officials have raised new questions on the regulation of Big Tech after some major social media platforms banned the accounts of President Donald Trump.


These firms have faced intense scrutiny over the past few years, with some policymakers wary of their role on the political process. One of the key questions is whether these companies should be treated as publishers rather than tech firms — meaning they would be more accountable for the content available on their platforms.


Yesterday Market Review


Gold


Gold eased on Monday, having touched a six-week low earlier in the session, clamped down by a firm dollar and a rise in U.S. Treasury yields on hopes of more fiscal stimulus.


The spot gold closed at $1842.83 per ounce; the volatility within the day is $1816.61-$1956.48.


 "We've seen a little rebound in the dollar, a slight pickup in yields and as a result we have seen some commodities markets, including the metals, pull back," said David Meger, director of metals trading at High Ridge Futures.


A "quiet period" prior to the inauguration of the Joe Biden administration in Washington and the Democratic agenda being put forward on interest rates, liquidity and stimulus are also weighing on the metals, Meger added.


The silver closed at $25.272, the volatility within the day is $24.447-$27.190.


While gold has generally been seen as a hedge against the inflation and currency debasement that could result from widespread stimulus, especially last year, that has changed as higher bond yields increase the opportunity cost of holding non-interest-yielding bullion.


Silver "should continue moving in gold's slipstream", Julius Baer analyst Carsten Menke said in a note.


Bitcoin plunged nearly 20% to a one-week low on Monday before paring losses, putting the cryptocurrency on track for its biggest one-day drop since March as its recent red-hot rally faltered.


People who invest in cryptocurrencies could well "lose all their money," the U.K.'s financial regulator said on Monday as the volatile price of Bitcoin slid from an all-time high of almost $42,000.


The cryptocurrency mania has also attracted the watchful eyes of financial regulators across the world. They worry that amateur investors could be sucked in only for cryptocurrencies like Bitcoin to collapse in value, as Bitcoin did in 2018.


Britain's Financial Conduct Authority put it starkly in a statement: "If consumers invest in these types of product, they should be prepared to lose all their money."


Forex


The dollar edged higher across the board on Monday, extending a rebound from the near 3-year low hit last week, taking strength from the recent spike in Treasury yields and the prospect of a growth boost from higher U.S. fiscal stimulus.


The U.S. dollar index closed at 90.51; the volatility within the day is 90.06-90.72.


U.S. President-elect Joe Biden, who takes office on Jan. 20 with Democrats able to control both houses of Congress, has promised "trillions" in extra pandemic-relief spending.


Ordinarily, the extra spending plans would force investors to worry about rising inflation and its detrimental effect on the U.S. dollar in a weak economy, but the currency has been supported in recent weeks thanks to rising U.S. yields.


U.S. government bond yields have logged big moves in recent sessions, with the Treasury yield curve experiencing a significant increase in yields in longer-dated bonds.


Benchmark Treasury yields rose to 10-month highs on Monday as investors priced for higher government spending under the incoming Joe Biden administration and before the Treasury will sell new long-dated supply.


The stronger dollar took a bite out of the pound, with the British currency down 0.7%, as Britain's chief medical adviser warned that the next few weeks of the pandemic will be the worst yet.


Crude Oil


Oil prices fell on Monday on renewed concerns about global fuel demand amid strict coronavirus lockdowns in Europe and new movement restrictions in China, the world's second-largest oil user, after a jump in cases there.


West Texas Intermediate crude settled at $52.159 volatility within the day is $51.493-$52.664. International benchmark Brent crude closed at $55.534, volatility within the day is $54.914-$55.923.

 

Mainland China saw its biggest daily increase in COVID-19 cases in more than five months, the country's national health authority said on Monday, as new infections in Hebei province, which surrounds the capital Beijing, continued to rise.


Shijiazhuang, Hebei's capital and epicentre of the new outbreak in the province, is in lockdown with people and vehicles barred from leaving the city as authorities move to curb the spread of the disease.


Most of Europe is now under the strictest restrictions, according to the Oxford stringency index, which assesses indicators such as travel bans and the closure of schools and workplaces.


Crude prices remained supported by Saudi Arabia's pledge last week for a voluntary oil output cut of 1 million barrels per day (bpd) in February and March as part of a deal under which most OPEC+ producers will hold production steady during new lockdowns.


Stocks


Stocks fell on Monday as investors assessed equity valuations and the outlook for more Covid-19 relief stimulus, along with ongoing political turmoil.


The Dow Jones Industrial Average slid 89.28 points, or 0.3%, to end the day at 31,008.69. The S&P 500 dipped 0.7% to 3,799.61, and the Nasdaq Composite pulled back by 1.3% to 13,036.43. At one point, the Dow was down 265 points.


Twitter — Shares of the social media platform sunk 6% after Twitter decided to permanently suspect President Donald Trump's account. Twitter said late Friday it made the decision to remove the president "due to the risk of further incitement of violence," after the deadly riot at the U.S. Capitol.


Tesla — The electric vehicle company slid more than 4% as investors took profits in the high-flying stock. The leg lower snaps an 11-session winning streak for Tesla, the stock's longest daily winning streak on record. Separately, Bank of America raised its price target on Tesla to $900, up from a prior forecast of $500.


Boeing — Shares were under pressure after a 737-500 jet crashed shortly after taking off from Jakarta's main airport over the weekend. Around midday, Boeing traded lower by 2.4% and contributed the most to the Dow Jones Industrial Average's decline.


Focus Tonight:


22:35 (GMT+8): United States Fed Brainard Speech;


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