Gold Slides After Fed Projections While Bitcoin Holds Key Support

This Wednesday, June 17, a macroeconomic turning point occurred, symbolized by the capitulation of gold which lost more than 40 dollars an ounce, and by the drop of bitcoin below the threshold of 65,500 dollars. This reaction follows the Fed’s forecasts, whose restrictive tone surprised investors who hoped for easing.

The Fed’s verdict and the shock of monetary projections

The meeting of the Federal Reserve’s Monetary Policy Committee concluded with no change in the federal funds target range, which remains at 3.50% – 3.75%, adopted unanimously (12-0).

However, the release of the economic projections chart revealed an aggressive stance and a restrictive bias that immediately rocked the markets.

Here are the views of the 18 Fed officials :

• 9 participants now project rate hikes by the end of 2026, including 1 expecting a 75 basis point increase, 5 anticipating 50 basis points, and 3 betting on 25 basis points ;
• 8 members recommend a status quo to keep rates unchanged at their current level ;
• 1 lone dissenter envisions a single rate cut by the end of the year.

This shift results from inflation remaining well above the historical 2% target (the energy CPI index climbs to 4.2%, a first in three years) and a median rate projection for the end of the year that rises from 3.4% in March to 3.8%.

Before the announcement, Guggenheim expert Patricia Zobel had warned investors by signaling that “several members would make rate hikes their baseline scenario,” a fear materialized by Jerome Powell’s hawkish tone.

The financial mechanism of gold’s capitulation

This change in situation immediately impacted traditional reserve assets, the foremost being gold, whose price fell more than 2% to close around 4,260.10 dollars an ounce. In macroeconomics, the prospect of a persistently high interest rate environment increases the opportunity cost of holding precious metals, which pay neither dividends nor coupons.

Thus, yields on 10-year US Treasury bonds are rising and flirt with 4.45%, pushing the real yield above zero with a rate around 0.25% when adjusted for 4.2% inflation. This rise in real yields and the strengthening of the US Dollar Index (DXY), which rose 35 points after the Fed statement, weighed heavily on commodities.

Moreover, the massive investor disengagement from precious metals was accelerated by the easing of geopolitical risk in the Middle East. An interim agreement project between the United States and Iran to free the Strait of Hormuz pushed oil (Brent) below 80 dollars a barrel, depriving gold of its last short-term supports. The asset’s bullish momentum was broken by the combined effect of a strong dollar and reduced global energy tensions, pushing fund managers to liquidate positions to turn towards the guaranteed yields of US government bonds.

On-chain microstructure and bitcoin’s resilience

In this general liquidation market, bitcoin resisted by limiting its decline to about 1% at 65,417 dollars, thus detaching from the precious metals correction. While the leading crypto still suffers from the overall risk aversion impact, its internal structure shows strong accumulation by institutional investors.

Data from the analysis platform Glassnode show that the accumulation trend score remained stuck at its maximum, 1.0, for over two weeks, signifying that large entities have taken advantage of the drop to absorb available volumes. Nearly 259,000 BTC have been accumulated in the price range between 59,000 and 67,000 dollars, keeping the price at a level 10% higher than its local cycle low recorded on June 5 at 59,375 dollars.

To break the bearish technical structure marked by increasingly lower highs, bitcoin must surpass the resistance at 83,000 dollars, a level Benedict Kendrick, analyst at Standard Chartered, considers the crucial pivot point to restart a sustainable bull market.

The evolution of core inflation remains the decisive criterion. If the planned signing of the Sino-American-Iranian protocol this Friday stabilizes energy prices, the Fed might ease its aggressive tone, opening the way to a crypto rebound. Conversely, if inflation persists despite the drop in crude oil prices, crypto investors’ resilience will continue to be tested by monetary tightening.