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- Gold price has jumped to another All-Time High figure of $2560.
- Amid macroeconomic uncertainty, can Bitcoin also retest its ATH?
The price of Gold rallied to a new all-time high (ATH), climbing above $2,560. The price increase follows growing speculations of a potential US Federal Reserve rate cut next week.
Meanwhile, Bitcoin (BTC), the world’s largest crypto asset, has been experiencing intense volatility in the past weeks. Many market participants are now examining whether Bitcoin will follow Gold’s historic uptrend.
Gold Prices Rise to Post-US Job and Inflation Data
As of this writing, the XAU/USD pair was trading at $2,568 after rising from a daily low of $2,511. Momentum on Gold raced upward despite the inverse correlation between bullion prices and US Treasury yields that had broken earlier in the day.
The precious metal’s upbeat sentiment comes amid Wall Street’s gains. According to the Bureau of Labor Statistics (BLS), Initial Jobless Claims for the week ending September 7 rose to 230,000, a mild increase from the 228,000 posted the previous week.
August’s Producer Price Index (PPI) climbed by 1.7% year on year, slightly below predictions of 1.8%. Meanwhile, Core PPI increased from 2.3% to 2.4%, below expectations of 2.5%. Additional information revealed that rising service costs caused producer prices, or “factory inflation,” to exceed forecasts.
Also, US Treasury yields surged, with the 10-year T-note gaining three and a half basis points (bps) to 3.689%. Current statistics and Wednesday’s Consumer Price Index (CPI) have confirmed a 25 bps rate drop, fueling Gold’s surge ahead of the Fed’s meeting.
“We are headed towards a lower interest rate environment, so gold is becoming much more attractive… I think we could potentially have a lot more frequent cuts as opposed to a bigger magnitude,” a source quoted by Reuters noted.
Will Bitcoin Be the Next to Set a New Record?
According to the CME FedWatch Tool, market participants expect the Fed to drop interest rates by 25 bps. However, speculation persists that the Federal Reserve could opt for a more aggressive 50 bps reduction.
Now that Gold’s price has hit an ATH, market participants wonder if BTC will exhibit the same trend. Rate cuts are historically bullish for Bitcoin since they tend to devalue the US dollar and increase demand for other assets. Individuals and corporations may turn to Bitcoin as a hedge against the debasement of the US dollar, which will lead to increased prices for the coin.
However, the upcoming rate cut could have unexpected consequences for Bitcoin. The potential for a more aggressive 50 bps cut introduces heightened concerns about an impending economic slowdown or a recession. As a result, market participants may withdraw from assets that they perceive as risky, including Bitcoin.
Bitcoin traded at $58,028 at press time, demonstrating a 0.5% decline in the past 24 hours. The trading volume also decreased by 20% to $29.8 billion, and it has to rally about 21% to retest the $73,750.07 ATH.
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