The gold bull market accelerated on Wednesday, with the yellow metal soaring 6% to surpass $5,400 an ounce for the first time.
Silver and platinum posted even bigger percentage gains, but gold, with a market capitalization close to $40 trillion, was easily the standout asset.
A sizable portion of gold’s gains came following comments from Federal Reserve Chair Jerome Powell at a press conference following the central bank’s universally expected decision to keep the benchmark federal funds rate range stable at 3.50%.3.75%.
When asked directly about the rapid rise in gold and silver prices, Powell cautioned against overinterpreting the rally as a macro signal. “Don’t take too much of the message [that] macroeconomically,” he said, adding that while some may argue that the Federal Reserve is losing credibility, “that’s simply not the case.”
“If you look at where inflation expectations are, our credibility is right where it needs to be,” Powell said. Gold bulls apparently thought otherwise.
Where is bitcoin going?
bitcoin Meanwhile, bulls continued to watch from the sidelines as real gold once again vastly outperformed its digital counterpart. Prices traded in an unbearably tight range throughout the day, declining slightly following the Federal Reserve’s decision and recently trading at $89,000, a stable level for the last 24 hours.
The prices of the rest of the major cryptocurrencies followed a similar action.
U.S. stocks were also little changed Wednesday as investors awaited earnings from companies such as Microsoft, Meta and Tesla.
Is Bitcoin Losing Its Digital Gold Advantage?
Despite macro tailwinds often seen as beneficial to Bitcoin as “digital gold” (including a weaker US dollar and rising geopolitical risk), BTC has been struggling recently while gold is up more than 90% in the last 12 months.
The contrast casts a shadow on bitcoin’s purported role as a macro hedge, especially as the assets it was designed to rival are outperforming, argued James Harris, CEO of performance platform Tesseract Group.
“We are clearly in a market regime where cryptocurrencies are underperforming some of the assets they were designed to supplant,” Harris said in a note. “Some of that outperformance is almost certainly due to a reassessment of geopolitical and fiscal risk, but it also reflects gold regaining some of its relative market share from bitcoin.”
