Gold’s record run took a breather this week, snapping an eight-week winning streak as traders took profits ahead of the Federal Reserve’s policy decision in October.
The pullback has eased safe-haven demand and, for the first time in weeks, shifted some attention toward risk assets, including bitcoin. .
Spot gold fell more than 6% from its all-time high above $4,380 an ounce hit on Monday, settling near $4,120 over the weekend. The pullback was driven by profit-taking, strong outflows from exchange-traded funds (ETFs), and a change in tone around U.S.-China trade relations.
Officials from both countries said they reached a “preliminary consensus” on key trade issues, easing fears of a new tariff cycle that had fueled the metal’s rise.
“The threat of imposing 100% tariffs on Chinese goods is effectively off the table,” US Treasury Secretary Scott Bessent said on Sunday after two days of talks in Malaysia laid the groundwork for a broader deal between President Trump and President Xi Jinping.
The weaker macroeconomic backdrop, combined with expectations that the Federal Reserve will cut rates by another 25 basis points this week, took the shine off gold’s parabolic rally. Silver and platinum also fell sharply in signs of a reset ahead of Wednesday’s decision.
But the timing may prove fortuitous for BTC.
After lagging behind gold for most of the quarter, Bitcoin gained more than 5% last week, reclaiming the $113,500 level and breaking free from a tight one-month range.
The move comes as the BTC/gold ratio, a measure of Bitcoin’s relative value against the yellow metal, showed its most oversold reading in nearly three years earlier, according to CoinDesk analyst Omkar Godbole.
The ratio’s 14-day Relative Strength Index (RSI) fell to 22.20 last week, below its February low and the weakest since November 2022. Historically, these extremes in the BTC/gold ratio have coincided with local lows for Bitcoin, often followed by periods of outperformance as traders pivot back toward higher beta assets once macroeconomic fears subside. decreases.
