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Over the past two days, Bloomberg Intelligence commodity analyst Mike McGlone published his firm’s commodity and crypto outlook reports, and McGlone’s latest analysis details that gold prices may resume their rally after a 1999-like foundation is built. Also, regarding bitcoin and ethereum, the analyst argues that the two leading cryptoassets will “outperform most major assets” when “the economic tide turns.”
Bloomberg Intelligence (BI) senior commodity strategist Mike McGlone believes gold, bitcoin (BTC) and ethereum (ETH) are currently forming price bottoms, and as the economy shifts back to better positions, all three are likely to rise. While gold is down from the precious metal’s all-time high ($2,070), it is currently held above 1,700 nominal US dollars per troy ounce. McGlone says gold is currently forming a base similar to the market performance it saw in 1999.
At that time, the price of gold was 250 nominal US dollars per troy ounce, and it never went below $250 per ounce again. BI’s senior goods strategist believes there is a possibility that this trend could happen again. “The difference in dollar-denominated gold vs. euro-based is approaching levels that formed a lasting basis for the metal price in 1999,” McGlone’s report explains. “Down about 10% in 2022 through Sept. 28, dollar gold compares with gains of 5% and 10% for the euro and yen.”
The commodities strategist added:
Aggressive tightening by the Fed to tackle inflation and high asset prices – which are propping up the dollar as the rest of the world tries to catch up – echoes trends from around two decades ago. The supports are strengthening the price of gold to resume the rally that started with that base.
McGlone further noted that rising gold on a non-dollar basis “shows the kind of stress that could break the Federal Reserve’s rate hike path.” If the Fed does happen to halt monetary policy, McGlone suspects that could be the catalyst for the rally to resume. “The relative discount in the dollar vs. euro gold spread shows currency concerns and suggests a potential catalyst for a gold bottom – an easing of expectations for Fed rate hikes,” the BI report claims.
In addition to the metal outlook for October, McGlone and fellow market strategist Jamie Douglas Coutts published BI’s crypto outlook for October. McGlone’s crypto analysis says that as the economy shifts, the two analysts see bitcoin and ethereum outperforming most of today’s assets. “As the ebbing economic tide turns, we see the propensity to resume for bitcoin, ethereum and the Bloomberg Galaxy Crypto Index (BGCI) to outperform most major assets,” the strategist’s latest report highlights.
The crypto report further states that interest rate increases could pose a potential threat and send the two leading assets into strong headwinds. “However, there is the potential for the benchmark crypto to shift towards becoming a risk-on asset, like gold and US Treasuries, which could play out over the course of 2H,” the October BI report said. Furthermore, McGlone also discussed how October is typically a bullish month for BTC in contrast to September’s dismal price history.
McGlone’s cryptanalysis says:
Since 2014, October has been the best month for bitcoin, with an average increase of around 20%, and in Q3 the BGCI increased by approx. 16% vs. 5% decline for Nasdaq 100 and S&P 500. Ethereum’s move to proof-of-stake could help it build a base above $1,000 and Bitcoin around $20,000.
What do you think of McGlone’s analysis regarding gold, bitcoin and ethereum? Let us know what you think about this topic in the comments section below.
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