empty
20.03.2025 09:23 AM
Markets Are Stuck in a Vicious Circle with No Exit in Sight (Potential Decline for Bitcoin and Gold Prices)

The markets are currently experiencing significant shock due to a prevailing negative sentiment that looms over them like a heavy burden, with no resolution in sight. Given this situation, the future dynamics of the market remain uncertain and raise important questions.

As expected, the Federal Reserve left all monetary policy parameters unchanged. During the press conference, Chairman Jerome Powell confirmed that the central bank hopes to cut the key interest rate twice this year but highlighted existing problems and risks. So, what are those?

The Fed chair didn't hide the consequences of Donald Trump's customs tariffs. He explicitly stated that the tariff policy is likely to lead to higher prices, and it is unclear how much prices will rise or whether these inflationary changes will be temporary. Powell admitted that the Fed itself doesn't fully understand the long-term effects of the 47th president of the United States' economic and geopolitical actions. The uncertainty factor will continue to loom over the national economy and markets.

Furthermore, for the first time since Donald Trump took office, Powell hinted that the tariff policy will contribute significantly to rising inflation as tariffs increase the cost of imports. This is especially notable because the structure of the U.S. economy remains primarily service-oriented. A majority of goods are imported, not produced domestically. This means that the rising costs of imports will likely drive inflation higher, potentially reaching levels much higher than what we see now.

So, why did the U.S. stock market receive even a small but much-needed boost in this gloomy situation?

First and foremost, this is because, despite the crisis in Europe, geopolitical tensions in the Middle East, and elsewhere, foreign capital is still flowing into the U.S., seeking refuge in such uncertain times. Additionally, after Powell's press conference, investors suddenly recalled that the Fed might cut interest rates twice. However, the markets and Powell seem overly optimistic and out of touch with reality. The reality is that with the expected rise in tariff-induced inflation, the risks of a recession, coupled with stagflation, are looming, making it impossible to lower interest rates under the current central bank monetary model.

Considering everything described above, I don't see any prospects for a strong recovery in demand for U.S. stocks, tokens, or commodity assets due to the extremely high uncertainty about the future of the U.S. and the global economy. The market is stuck in a vicious cycle, moving along without any current possibility of breaking free. The only asset that will likely continue to be in demand is gold, a safe-haven asset currently testing the $3,050 per ounce level. Also, under the current conditions, the U.S. dollar, according to its ICE index, will likely continue to consolidate in the range of 103.20-104.00 points for some time.

Forecast of the Day:

This image is no longer relevant

This image is no longer relevant

Bitcoin

The token is trading erratically, influenced by limited demand due to the overall uncertainty that dominates the markets. This prevents it from growing confidently. Its inability to break above the resistance level of $86,500 could lead to a local reversal and a decline to the $82,200 mark.

Gold

Gold prices are receiving support due to high geopolitical risks and uncertainty surrounding the U.S. and global economies. Investors and central banks are actively buying gold to hedge their financial risks. The local overbought condition of the asset may lead to a correction to $3,025, from which it will try to rebound. After overcoming the $3,050 mark, it may aim for the new target level of $3,080.

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/JPY. Analysis and Forecast

The USD/JPY pair remains under pressure despite the U.S. dollar posting moderate gains for a second consecutive day, approaching the 144.00 level. Improved global risk sentiment following the trade agreement

Irina Yanina 15:01 2025-07-03 UTC+2

XAU/USD. Analysis and Forecast

Gold prices are struggling to gain momentum after a moderate intraday rebound from the $3340 level. Traders remain cautious, preferring to await the release of the U.S. Nonfarm Payrolls (NFP)

Irina Yanina 12:21 2025-07-03 UTC+2

EUR/JPY. Analysis and Forecast

consecutive day, once again approaching the yearly high reached earlier this week.The trade agreement between the United States and Vietnam has eased concerns over a prolonged trade conflict, increasing investor

Irina Yanina 12:13 2025-07-03 UTC+2

Good News Will Support Stock Markets and Token Demand (Potential Upside for Bitcoin and #NDX)

The market has ignored extremely weak employment data from ADP, focusing its attention on other factors. The ADP report released on Wednesday showed a significant slowdown in the U.S. private

Pati Gani 10:40 2025-07-03 UTC+2

Trump Targets China Through Vietnam

Yesterday, it was revealed that President Donald Trump had reached a trade agreement with Vietnam. This came after several weeks of intense diplomatic negotiations between the two countries and just

Jakub Novak 10:00 2025-07-03 UTC+2

A Wake-Up Call for the U.S. Economy

Yesterday's U.S. employment data served as a wake-up call for the American economy. According to the report, the number of employed persons declined in June for the first time

Jakub Novak 09:55 2025-07-03 UTC+2

The Market Bets on Profits

The market remains confident in a positive future. It hears only what it wants to hear. Negative news is ignored, allowing the S&P 500 to set new records. It doesn't

Marek Petkovich 09:35 2025-07-03 UTC+2

What to Pay Attention to on July 3? A Breakdown of Fundamental Events for Beginners

A significant number of macroeconomic reports are scheduled for release on Thursday, including some key reports. As a reminder, U.S. labor market and unemployment data are typically released on Friday

Paolo Greco 06:53 2025-07-03 UTC+2

GBP/USD Overview – July 3: Jerome Powell Finally Responded to Trump

The GBP/USD currency pair plummeted on Wednesday like a stone. However, every drop in the pair eventually gives way to a much stronger rise. Therefore, at this point, there's

Paolo Greco 03:45 2025-07-03 UTC+2

EUR/USD Overview – July 3: One Big Trump Law Passed, Dollar at 4-Year Lows

The EUR/USD currency pair traded relatively calmly on Wednesday, although the word "calm" may not accurately describe the daily decline of the dollar. The most accurate picture of what's happening

Paolo Greco 03:45 2025-07-03 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.