The price of gold has reached unprecedented heights following a recent interest rate cut by the United States Federal Reserve, prompting crypto analysts to speculate on when Bitcoin might experience a similar surge.
As reported by GoldPrice.org, gold soared to a record high of $2,629 per ounce on September 23, marking a more than 5% increase over the past two weeks. This significant rise in gold prices follows the Fed’s decision to lower interest rates by 0.5% on September 18, creating favorable conditions for the precious metal.
When interest rates are reduced, assets tied to these rates, such as short-term government bonds, become less attractive to investors. Consequently, inflation hedges like gold gain popularity as a diversification strategy.
Geopolitical Influences
Several global geopolitical factors have also contributed to the increased demand for gold. Ongoing conflicts, including the wars between Russia and Ukraine and Israel and Hamas, along with the upcoming U.S. presidential election in November, have heightened investors’ appetite for gold.
Moreover, a report from Goldman Sachs on September 12 indicated that global central bank gold purchases have tripled since Russia’s invasion of Ukraine in early 2022, further supporting gold’s price.
Gold prices are projected to continue rising, with researchers at Goldman Sachs forecasting a potential increase to $2,700 per ounce by early 2025, driven by further Fed rate cuts. However, Peter Boockvar, chief investment officer at Bleakley Financial Group, pointed out that gold has not yet surpassed its inflation-adjusted peak price of $3,200 from 1980.
A Dig at Digital Assets
In a comment on social media, prominent gold advocate Peter Schiff took the opportunity to criticize digital assets amidst gold’s rally. He stated, “Gold just hit another record high, but few investors notice or care,” emphasizing that, with much attention focused on Bitcoin, investors are overlooking gold’s significant gains.
Bitcoin, often dubbed “digital gold,” has also experienced a notable uptick, climbing 8.5% since the Fed’s rate announcement. The asset reached an intraday and four-week high of $64,660 during early trading on September 23, according to CoinGecko.
Markus Thielen, founder and CEO of 10x Research, noted in a message to investors on September 22 that the chances of a major Bitcoin breakout are increasing as the market approaches the crucial October-to-March window. He anticipates a new all-time high for Bitcoin before the end of 2024, pointing out that Bitcoin’s performance in 2024 has followed a seasonal pattern similar to that of 2023.
Seasonal Trends
Thielen stated, “This is why traders should anticipate a major breakout, potentially reaching new all-time highs in Q4 2024.” The historical patterns of Bitcoin’s seasonal performance suggest that as the year progresses, investors could see significant price movements, especially as demand for cryptocurrencies often rises during certain periods.
The current climate in both the gold and cryptocurrency markets reflects a period of heightened interest and potential profitability for investors. With gold hitting new all-time highs and Bitcoin rallying to significant levels, the interplay between traditional assets and digital currencies is becoming increasingly complex and intertwined. As geopolitical tensions and monetary policy shifts continue to influence these markets, investors are keenly observing how these trends may develop in the coming months.
Featured image credit: Kanchanara via Unsplash
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