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Gold prices edged up slightly on Tuesday, trading at $4,305 an ounce – a striking distance from the October high of $4,381.
The increase reflects a broader flight to safety as investors deal with uncertain monetary policy and seek to hedge against inflation. With the markets pricing in the prospect of another rate of 76% in January, the appeal of gold as a non-yielding asset has increased.
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The historical divergence signals a potential turning point
The US dollar, which was near its lowest level of the month during the Asian session, provided additional wind for bullion. Gold is up more than 64% since the beginning of the year, marking its best annual performance since 1979. Interest rate cuts by the Federal Reserve, continued central bank buying, and continued flows into gold-backed index funds have pushed the price higher.
Stocks are up Funds exchanged for gold Every month this year, except May, according to the World Gold Council, highlights the continuous investor appetite for this safe asset. When prices fall, the opportunity cost of holding gold decreases, making it more attractive compared to interest-bearing investments.
Meanwhile, the price of Bitcoin remains around $86,000 after a sharp slap led to a one-hour liquidation worth $200 million on Monday. The leading cryptocurrency is still about 30% below its October peak of $126,210. While gold acts as a safe asset in turbulent times, Bitcoin often trades as a risk asset, experiencing flows when investors seek stability.
The rise of gold and Bitcoin has attracted the attention of market analysts. The cryptocurrency trader said Michael van de Poppe Even the Relative Strength Index for Bitcoin against gold has fallen below 30 for only the fourth time in history.
It supports technical analysis by another Misterrcrypto analyst This opinion. The BTC / Gold pair seems to be testing a long ascending support line for the fourth time since 2019. The Z-Score is -1.76, in oversold territory, and previous touches at this support level have led to significant rallies.
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However, technical patterns do not guarantee future movements. The current macroeconomic environment differs from previous cycles, as inflation remains high and geopolitical risks continue to support gold demand. The extent to which investors will shift from gold to Bitcoin remains uncertain.
Macro factors in focus
Markets are closely monitoring this week’s US economic data to fill the void created by a six-week government shutdown. The Bureau of Labor Statistics on Tuesday released its highly anticipated combined employment reports for October and November. However, key details will be missing – including the unemployment rate in October, resulting in the first gap in that vital series of data.
Economists expect a $50,000 wage increase and an unemployment rate of 4.5%, which is in line with a slow but steady labor market. Even moderate weakness in the numbers would strengthen the case for more interest rate cuts, according to Morgan Stanley strategist Michael Wilson.
Fed provided It cut interest rates by 25 basis points last week, but signaled a possible pause amid persistent inflation. However, Federal Reserve Governor Stephen Meiran said on Monday that the current above-target inflation does not reflect the underlying dynamics, stressing that “prices are stable again”. Investors currently rate a 76% chance of another cut in January.
Technical perspective
Bitcoin options data reveals strong open interest centered around the December 26 expiration date, with heavy positions on the $100,000 strike. Analysts specify a range of $86,000-$110,000, suggesting increased volatility as traders realign as the end of the year approaches.
Silver has more than doubled this year with a 121% increase, From its highest level on Friday At $64.65, but still close to historical levels. The increase prompted tight inventories, strong industrial demand and inclusion on the US Critical Minerals List.
With gold approaching new highs and Bitcoin consolidating near key support levels, the coming weeks could determine whether the historical divergence between the two assets resolves by rotation, or the turmoil increases.
