This post was originally published on this site.
Key Takeaways
- The Bank of Japan’s rate hike pressured gold and crypto prices.
- Gold momentum weakened despite strong demand from central banks.
- Bitcoin’s price remains bearish, as it struggles below key resistance.
The Bank of Japan (BoJ) pushed ahead with policy normalization on Friday, lifting short-term interest rates to the highest level since 1995.
This development triggered a sell-off across government bonds as the country’s central bank raised its benchmark rate by 25 basis points to 0.75%.
Interestingly, this was in line with expectations from some economists. Unfortunately, it has also unsettled risk-sensitive markets.
In the aftermath of this Japan rate hike, gold prices slipped. Bitcoin (BTC) and Ethereum (ETH) were not immune to the declines, as they continued to extend their losses.
But will this trend change before Christmas? Let’s find out.
BoJ Decision Makes Christmas Breakout Unlikely
In its statement , the BoJ stressed that real interest rates are expected to remain significantly negative.
For risk assets, including cryptocurrencies, this messaging helped soften the tightening narrative and limited immediate downside follow-through.
Japan’s policy normalization, which began last year with the end of the world’s last hostile interest rate regime, has been deliberately gradual.
The BOJ has repeatedly framed its approach around a cycle of rising wages and prices, rather than aggressively restricting liquidity.
That interpretation is reflected in broader market behavior.
At the time of writing, the Yen weakened 0.25% to 155.92 against the dollar, while the Nikkei 225 climbed 1.28%.
For digital assets, the takeaway was clear. While rates are rising, the BOJ has not yet signaled the kind of liquidity withdrawal that typically triggers sustained risk-off pressure across crypto markets.
Interestingly, gold was not immune to the ripple effects of the announcement.
In recent sessions, the metal’s technical structure had pointed toward a potential breakout to fresh highs, echoing silver’s earlier advance.
However, the Bank of Japan’s rate hike has complicated that setup.
With higher yields pressuring non-yielding assets and risk appetite recalibrating, an upside move in gold now appears less likely, making a Christmas Day breakout increasingly improbable.
Interestingly, the move also coincided with softer U.S. inflation data. Consumer prices rose 2.7% year-over-year in November, undershooting economists’ expectations of a 3.1% increase.
This data point reduced gold’s appeal as an inflation hedge and added pressure to prices.
Gold Price Momentum Starts Fading
On the daily chart, gold is trading near $4,323 and remains structurally contained within an ascending channel.
However, recent price action shows an apparent loss of upside momentum, with the metal failing to challenge the upper boundary of the formation.
Instead, the price appears to be drifting toward the lower trendline, suggesting that support, rather than resistance, is becoming the immediate focus.
Furthermore, the Moving Average Convergence Divergence (MACD) has printed a bearish crossover, signaling a shift toward downside pressure.
If this momentum persists, gold could slide toward the $4,270 region.
In a more pronounced bearish scenario, a retracement toward the 0.618 Fibonacci level near $4,205 cannot be ruled out.
That said, the broader trend remains intact. Should demand for the precious metal reaccelerate, the recent rate decision by Asia’s second-largest economy may become less of a dominant factor.
In that case, a push toward fresh highs, potentially around $4,593, would place gold back in breakout territory.
Demand Still Stronger
Beyond macro policy shifts, gold prices continue to draw support from less visible demand. Unofficial central bank purchases have emerged as a persistent impact.
Estimates suggest global central banks have accumulated roughly 9,500 tonnes of gold since 2010—around 3,700 tonnes, or 64%, more than officially reported purchases.
That trend accelerated in 2022. Since then, central banks are estimated to have added approximately 3,500 tonnes of gold, accounting for nearly 37% of total purchases over the past 15 years.
Taken together, the data suggest that the underlying demand for gold may be materially stronger than official disclosures imply, which complicates short-term bearish narratives driven by interest rates and currency strength.
Bitcoin Holiday Weakness Persists
For crypto, the Bank of Japan’s rate hike decision has yet to offer any positive impact. Instead, the price action suggests that risk appetite remains constrained.
Bitcoin’s price failed to reclaim the $90,000 level following the announcement, while ETH also drifted lower.
On the daily chart, Bitcoin’s price remains confined within a descending triangle, with horizontal support clustered around $84,020.
This structure continues to pressure the downside, particularly as momentum indicators fail to show sustained accumulation.
The Chaikin Money Flow (CMF) has slipped below the zero line, signaling net capital outflows and reinforcing the bearish bias.
If this dynamic persists, BTC risks a breakdown toward the $80,347 region, keeping price action subdued into the holiday period.
That said, the setup is not irreversible. A shift in buying pressure could invalidate the pattern and reopen higher levels.
In that case, Bitcoin could attempt a recovery toward $91,205, though a move of that magnitude would require a clear improvement in volume and market participation.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.