Gold vs. Bitcoin: War Risks Return as XAUUSD Surges and BTC Struggles to Lead

Gold (XAU) and silver (XAG) prices moved higher after U.S.-Iran ceasefire news. The precious metals market quickly reacted to the news and reached the immediate resistance areas in both metals. On the other hand, oil prices dropped as the fears of supply eased.

The U.S. dollar and U.S. Treasury yields dropped after the news, which further supported gold and silver prices. Bitcoin (BTC) price also found support, but the momentum was not as aggressive as seen in the gold and silver markets. However, the consolidation above the long-term support area indicates that Bitcoin is forming support.

Ceasefire Optimism Lifts Metals, Pressures Oil and Yields

The initial reaction to the ceasefire was clear, as gold and silver prices rallied due to the falling U.S. Treasury yields. At the same time, the U.S. dollar dropped from the resistance of 100.50, as the index failed to break higher during the past few months.

On the other hand equity markets also improved as sentiment picked up. Bitcoin followed the broader risk on mood but did not lead the move. However, ongoing conflicts between Israel and Hezbollah in Lebanon are still not resolved. Iran has also rejected the idea of a bilateral ceasefire under current conditions.

The United Arab Emirates has also carried out strikes on Iranian facilities, and Iran is responding with missiles and drones. The oil price is again strengthening after dropping to the support zone of $90, which increases inflation risk and pushes the market back into uncertainty.

Bitcoin-to-Gold Ratio Signals Shift in Market Leadership

The bitcoin to gold ratio trades within an ascending channel and hit strong support at 12. The index is now rebounding from this strong support back towards the 26 level. However, a break below 12 will likely lead to a further drop in the ratio. Since the ratio has hit strong support and is rebounding, bitcoin is likely to lead gold prices during the next few weeks. However, a break above the resistance of 40 will likely trigger a strong surge in bitcoin prices.

A similar price action in the ratio is observed on the weekly chart, which shows strong support around the 12 to 13 level. A break below this level will likely lead to a further drop. In line with this, the drop will likely indicate further downside in bitcoin prices.

 

Bitcoin Holds Key Support as Bullish Structure Builds

 

From technical perspective, Bitcoin is trading at the long-term support of $50,000 to $60,000 level, as seen by the black trend line on the chart. This trend line has also found support at the 200 SMA on the weekly chart. A break above $80,000 in Bitcoin will likely lead to a strong rally towards $95,000, which is the 50 SMA on the weekly chart. However, a break above $125,000 is required to push Bitcoin prices towards $300,000.

Overall, Bitcoin remains in a strong uptrend, but the price is still in the low range. Prices are likely to find support around this level, as this is a key support area. This support is also evident as Bitcoin has entered extremely oversold conditions not seen since 2022 and 2018 when Bitcoin prices produced a bottom.

The strong consolidation during the past two months has produced a strong bullish structure, as seen on the chart below. The $50,000 to $60,000 level remains a strong support area, seen by the ascending broadening wedge pattern. A break above $75,000 is required to keep the bullish momentum towards $95,000.

Final Words

Geopolitical risks are again increasing, as oil prices are moving upwards after finding support. The reemergence of uncertainty increases volatility in precious metals. Bitcoin remains strong above the major support and is beginning to build a base but it is still at mercy of the overall market mood. As tensions keep rising, gold will probably be the first to move and then it will be followed by Bitcoin. As long as the spot gold holds $4,000 and Bitcoin holds $50,000, both assets are poised for upside.