China’s Consumer Price Index (CPI) fell by 0.3% year-on-year in September, which is worse than the expected 0.1% drop. This ongoing decline raises worries about domestic demand and economic growth, which could influence future decisions by the People’s Bank of China. In the currency markets, the EUR/JPY fell close to 175.50 as investors sought safe havens. Meanwhile, the EUR/USD climbed above 1.1600 after Federal Reserve Chair Jerome Powell hinted at possible interest rate cuts.

Gold Prices and Cryptocurrency City

Gold prices have been unpredictable but are still influenced by US-China trade tensions and potential Federal Reserve rate cuts. The weakness of the US Dollar has pushed gold close to the top of an upward trend on the daily chart. Bitcoin, Ethereum, and Ripple have paused their recovery efforts as they hit significant resistance levels. Traders are closely monitoring whether these cryptocurrencies can continue their recovery or face new selling pressure. Silver is becoming popular among traders as they shift focus from gold due to uncertainty in policy. Gold recently surpassed $4,000, but many profits from this increase are now being invested in silver. Analyst Karim AbdelMawla from 21Shares believes the crypto bull market could last another six to twelve months, given the ongoing interest and investment in digital assets.

Deflationary Pressure and Weak US Dollar

China is experiencing ongoing deflationary pressure, with the September CPI again showing a negative -0.3%. This trend, which became a major concern in late 2023 and early 2024, indicates weak global demand. Derivative traders might consider buying put options on indices heavily influenced by Chinese manufacturing to protect against further declines. The weakness of the US Dollar is significant, with the DXY struggling to stay above 99.00 after the Fed suggested more rate cuts might be on the way. This contrasts sharply with the hawkish stance of 2022-2023 when the index hit over 114. Traders should think about purchasing call options on EUR/USD and GBP/USD to take advantage of this momentum in the coming weeks. Gold’s rise toward $4,000 is directly tied to the weak dollar and global uncertainty. With prices so high, a bull call spread could be a smart move to gain further profit while guarding against a potential sharp decline. Silver is also gaining traction, and buying silver futures or call options could be an exciting way to engage with this trend. The crypto rally, which gained traction after Bitcoin ETFs were approved in January 2024, appears to be slowing down. While long-term sentiment remains optimistic, the next few weeks could bring significant price fluctuations as it tests technical levels. Employing an options strategy like a straddle on BTC or ETH could help profit from major price movements, regardless of their direction. Create your live VT Markets account and start trading now.

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