Bitcoin increases "excitingly", the main obstacle makes it difficult for gold prices to break out

Gold prices have yet to surpass the resistance level of $1,800/ounce. Analysts at HSBC bank warn that the return from gold investment will tend to decrease in the coming time. The reason comes from the US Federal Reserve's monetary policy normalization plan (Fed) which has boosted US bond yields and the US dollar.

Accordingly, gold prices may face difficulties as central banks of major economies in the world are on the path to changing monetary policy. Investors are increasingly expecting the Fed to reduce monthly bond purchases by the end of this year.

Global fiscal and monetary policies no longer support gold prices in the US or globally, said HSBC analysts. With extremely loose monetary policy coming to an end and fiscal stimulus being withdrawn, investment in gold will decline.

We still believe that the USD is gradually moving towards a stronger trend due to slowing global growth and the Fed's efforts to stabilize. The strengthening of the US dollar could have a negative impact on gold."

The comments came as gold prices were stuck below $1,800 an ounce. December gold futures are holding up, last trading at $1,771.60 an ounce, up 0.31% on the day.

HSBC noted that rising consumer price index will not have much impact on gold if inflationary pressures end up driving bond yields higher. The yield on the 10-year bond is currently near a 4-month high of 1.62%.

Not only are bond yields rising, but there are growing expectations that the Federal Reserve could start tightening interest rates before the second half of 2022. The FedWatch tool of the CME derivatives exchange shows that the market has a more than 47% chance of increasing interest rates in June next year.

In addition, precious metals have not attracted much buying momentum as investors are looking towards the digital currency market. The Bitcoin has been continuously increasing in popularity recently. Bitcoin has now peaked at $63,000/BTC and is expected to soon reach $70,000.