Global market turmoil sends gold, dollar and cryptos on wild ride

Global financial markets are experiencing heightened volatility, driven by geopolitical tensions, shifts in monetary policies and dramatic movements in major currencies.

Traditionally seen as a safe haven, gold has not been immune to these disruptions, with prices experiencing sharp declines. Meanwhile, the U.S. dollar has surged to record highs, fueled by large inflows from carry trade operations, while cryptocurrencies like bitcoin and ethereum are struggling to find stability amid a broader market selloff.

Gold prices under pressure

• Market reaction: Gold prices experienced a sharp decline, with spot gold dropping by 2% amid global market turbulence. As of Aug. 6, 2024, gold is trading at $2,410 per ounce, while the price of a gram of gold in Türkiye stands at ₺2,585.
• Geopolitical risks: Analysts highlight geopolitical risks and the potential for a Federal Reserve rate cut in September, which is now being priced in with a 72.5% probability. This uncertainty may lead to short-term dips, but experts suggest these could be buying opportunities for long-term investors.
• Turkish gold market: Gram gold is trading between ₺2,595 and ₺2,645, with quarter, half, and full gold coins priced at ₺4,335, ₺8,660, and ₺17,275, respectively. Analysts project support at ₺2,575 and resistance at ₺2,610.

Dollar hits record highs as carry trade inflows boost TL

• Dollar surge: The U.S. dollar reached a record high of ₺33.48 on Aug. 6, 2024, before slightly retreating to ₺33.36. This spike is attributed to the global financial storm triggered by the Japanese yen’s appreciation.
• Carry trade impact: Over the past six months, Türkiye has attracted approximately $20 billion in hot money through carry trade operations, further stabilizing the Turkish lira. However, experts caution against expecting significant volatility due to Türkiye’s strong central bank reserves and tight monetary policy.
• Analyst insights: Zumrut Imamoglu of BofA Merrill Lynch emphasizes that the Turkish lira is insulated by the central bank’s substantial reserves, with no major jumps expected in the dollar exchange rate.

Cryptocurrencies struggle amid market selloff

• Bitcoin and ethereum slump: Bitcoin fell to $49,500, its lowest in six months, before recovering slightly to $55,700. Ethereum also dropped to $2,100 before rebounding to $2,500. Despite this recovery, both cryptocurrencies remain significantly below last week’s levels.
• Resistance levels: Analysts pinpoint $56,500 for bitcoin and $2,700 for ethereum as critical resistance levels that need to be breached for sustained upward movement. The recent sell-off is linked to large-scale withdrawals from U.S. Exchange-Traded Funds (ETFs) amidst the global market turmoil.
• Long-term outlook: Experts advise that while the current levels might be seen as an opportunity for long-term investors, the market remains cautious with the potential for further downside if key support levels fail to hold.