As the price of gold hit a new record high above $2,100 an ounce this week, the precious metal’s performance greatly eclipses that of Bitcoin. Where gold enters uncharted territory with a relatively stable dollar, Bitcoin still needs to rebound over 60% to beat its previous high.
Gold shines brighter than Bitcoin!
For the first time, gold exceeded the symbolic milestone of $2,100 per ounce this week. This historic performance contrasts with Bitcoin which is still far from its record, more than 60% below.
While Bitcoin maintains its appeal among investors, another asset is recently taking center stage: gold. Reaching $2,127, an ounce of gold surpassed the $2,100 threshold, an event that analyst Peter Schiff considers much more significant than Bitcoin crossing $40,000.
This meteoric rise in gold takes place in a favorable economic context. Alex Jooster, financial analyst, points out that gold has broken its historical negative correlation with the real yield of the 10-year Treasury.
Now, it is negatively correlated with Fed rate hike expectations, suggesting that if the Fed decides to raise rates, gold could maintain its upward trajectory.
Gold soars, supported by a stable dollar and economic uncertainties
The ounce of gold is currently experiencing a rapid rise in a bull market. After two consecutive months of progress, it reached an all-time high of $2,127, recording an increase of $56 during the day. This exceptional record takes place in a context where the American dollar remains relatively stable.
Even with a 0.2% decrease in the greenback this Friday, it is surprisingly resilient to growing geopolitical tensions. According to the analyst Peter Schiff this resilience of the dollar in the face of uncertainty raises concerns and encourages the use of safe havens such as gold.
Furthermore, the recent reduction in inflation in the United States and the slowdown in the job market are reinforcing expectations of monetary easing by the Fed. A possible reduction in key rates from 2024 reduces the opportunity cost of holding gold, thus intensifying its attractiveness.
“If gold is this strong with a stable US dollar, imagine how much it will rise if the dollar starts to fall. The fact that the dollar is not rising due to increased geopolitical tensions does not bode well for the dollar and is very bullish for gold.”, says Peter on X
Bitcoin still needs to rebound 60% to break its record
Conversely, Bitcoin is still far from its previous all-time high. To exceed it, the cryptocurrency must still rebound by more than 60% in the coming months.
After a trying year 2022, marked by a loss of value of up to 70% between November 2021 and June 2022, Bitcoin is ending the year 2023 in remarkable fashion. Over the whole year, BTC shows an increase of 140%. The recent rise in Bitcoin already heralds a change in trend, with the cryptocurrency gradually heading towards its peak reached in November 2021.
Although their trajectories diverge, gold and Bitcoin remain two popular safe havens in times of uncertainty. Gold should see its upward momentum continue while Bitcoin retains strong rebound potential.
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