Gold rose to a record high of $2,135.39 per ounce on Monday during the Asian trading session while Bitcoin broke $40,000 a coin resistance levels.
This was despite Federal Reserve Chair Jerome Powell’s cautious reminder that policymakers are not in a rush to ease interest rates.
Market analysts observed an influx of investments into gold and Bitcoin, attributing the trend to mounting expectations of Federal Reserve interest-rate cuts in the coming year.
Kyle Rodda, a senior market analyst at Capital.com in Melbourne, noted, “Markets are piling in on the rate cut bets. Gold can run higher and will do so at the earliest sign of a recession.”
The rally in these alternative assets persisted even as the dollar experienced a slight uptick, and two-year Treasuries retraced some of Friday’s robust gains.
Traders maintained their bets on a potential Federal Reserve rate cut, with swaps pricing in a full reduction by May and projecting a full point of easing by December 2024.
Powell, while stating that the central bank is ready to hike further if necessary, emphasized that policy is “well into restrictive territory.”
This surge in gold and Bitcoin comes on the heels of US stocks closing at their highest since March 2022. However, concerns linger as signs emerge that American households, after a period of exuberant spending, might be starting to pull back.
Shane Oliver, head of investment strategy and chief economist at AMP Ltd. in Sydney, cautioned that the recent rebound in shares leaves them technically overbought and at risk of a consolidation or short-term pullback.
As the global economy continues to face uncertainties, all eyes will be on key events this week, including Australian growth, Chinese inflation, and US non-farm payrolls data.
Meanwhile, the cryptocurrency market anticipates potential approval of US spot Bitcoin exchange-traded funds, adding another layer of excitement to the financial landscape.