Global Geopolitical Uncertainty Pushes Gold and Bitcoin to Record Highs

The price of gold rose to an all-time high on Tuesday, boosted by its safe-haven status as investors anticipate lower US interest rates later this year. Shortly after 1330 GMT, spot gold in New York touched $2,141.79 per ounce, exceeding the level of $2,135.39 established in early December, before falling slightly.

Gold’s worth has increased by around 15% since the same stage last year.

On Tuesday afternoon, the Thai Gold Traders Association website quoted gold selling prices of 36,000 baht per baht-weight (15.2 grammes). Analysts believe the conditions are favorable for local gold prices to reach 38,000 baht this year.

“We are likely to see gold reaching new all-time highs soon with potential easing of US interest rate cuts, while global geopolitical uncertainty and apprehension about economic activity are likely to fuel the high demand for gold,” said Ricardo Evangelista, a senior analyst at ActivTrades.

Last week, gold climbed by roughly $50 due to dismal US industrial statistics and lessening pricing pressures.

Raphael Bostic, president of the Federal Reserve board of Atlanta, said on Monday that he still believes the US central board should approve two quarter-point interest rate decreases by the end of the year.

The focus now goes to Fed Chairman Jerome Powell’s two days of congressional testimony on Wednesday and Thursday, amid a week jam-packed with critical economic data as investors seek additional hints about the timing of rate decreases.

According to the CME FedWatch tool, traders now believe there is a better than 50% likelihood that the Fed will begin decreasing rates by June, thereby increasing demand for non-yielding gold.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, has seen its holdings fall 10% year on year as of March 4.

“All inflows following the coronavirus pandemic in 2020, as well as those resulting from the war in Ukraine two years later, have been reversed. In light of the continuous ETF (exchange-traded fund) selling, the gold price is holding up fairly well,” Commerzbank analysts noted.

Meanwhile, Bitcoin’s price soared beyond $69,000 on Tuesday, setting a new milestone. The achievement surpasses bitcoin’s previous peak in November 2021, and comes after a year-long rise that has grown its value by 190%.

Bitcoin’s previous record high was $68,990.90, according to cryptocurrency news site CoinDesk. Bitcoin’s peak was almost immediately followed by a steep collapse, with the cryptocurrency falling below its beginning price of approximately $66,000.

The cryptocurrency’s record price represents a stunning rebound following a spate of bankruptcies, fraud prosecutions, and crashes in the previous two years. Several other cryptocurrencies, including Ethereum, have seen their prices rise as part of the crypto market’s overall advance.

The spike coincides with the approval by US regulators early this year of a number of new exchange-traded funds that follow the price of bitcoin, some of which are marketed by major financial institutions such as Fidelity and BlackRock.

Crypto proponents praised the Securities and Exchange Commission’s approvals as proof of legitimacy and longevity. This week, ETF trading activity increased as the price of bitcoin rose.

Bitcoin is also approaching a “halving” event, which occurs every four years and cuts bitcoin miners’ payouts in an attempt to manage the overall supply of cryptocurrency available for trading.

In general, halvings lead to greater bitcoin speculation and investment activity.

Despite the multiple cryptocurrency scandals and investigations of the last year, Bitcoin’s value has remained stable as large investors purchased tens of millions of tokens.

Bitcoin supporters have suggested that the advent of ETFs and the entry of major financial institutions will be beneficial to the crypto industry, providing investors of all types additional reasons to buy bitcoin and so driving up the price.