Gold hits record highs, bitcoin at 41k as market bulls came in prepared for the last month of the year.
The flagship crypto asset topped $41,500 in the early hours of Monday for the first time since early May 2022, while Ethereum rose above $2,200 amid a broad but modest rally in the crypto market.
Gold hit a record high, market analysts anticipate that the global bullion rush is expected to continue, with spot prices reaching $2,100 in the first trading session of the week
Prices for the yellow metal rose for the second consecutive month as the Israeli-Palestinian conflict increased demand for safe havens and expectations for interest rate cuts provided further support. The precious metal tends to perform well during times of economic and geopolitical uncertainty due to its status as a reliable store of value.
A recent survey by the World Gold Council showed growing pessimism about the US dollar as a reserve currency, with 24% of central banks intending to increase their gold reserves over the next 12 months.
Consequently, Bitcoin has been toying with the $40,000 mark for the past few days, but it finally broke above $40K early Monday morning, marking a day rise of 4% at the time of writing, according to Binance data. Ethereum is trading at $2,205 and has risen by a similar percentage over the past 24 hours.
Bitcoin’s value has more than doubled this year, with most of the gains occurring in recent weeks as investors speculate about the possible approval of a U.S. ETF that directly tracks the price of the crypto asset.
Although Grayscale prevailed in a significant legal struggle against the regulator to have its application for a spot ETF approved, the Securities and Exchange Commission has not indicated that it plans to approve a spot ETF soon.
Recent remarks from Fed Chair Jerome Powell, who noted a greater need for balance between maintaining tight monetary conditions and still encouraging a gentle landing for the US economy, were perceived by markets as being noticeably less hawkish.
Due to this, traders started pricing in a 90%+ possibility that the Fed will hold rates until December and a 60%+ chance that rates will be lowered by March 2024. The Fed will convene on December 12 and 13.
Increased interest rates reduce demand for the yellow metal, which bears no interest, while bonds and other assets with greater yields become more profitable.
However, the job market seems to be in good shape and U.S. inflation is still far higher than the Fed’s 2% annual target. More hints on the latter are anticipated in the non-farm payrolls report, which is coming this Friday.
Despite giving up much of its intraday gains, the precious metal is currently trading below $2,100, up about 0.70% on the day. In an environment where the daily chart is overbought, a slight increase in US Treasury bond rates helps the US Dollar (USD) draw in some buyers and compels bulls to take some profits off the table.
Nevertheless, the non-yielding yellow metal may continue to benefit from growing predictions that the Federal Reserve (Fed) is finished raising interest rates and may start to loosen its monetary policy by the first half of 2024.