Quick Facts:
- Gold Price: Reached an all-time high of $2,911 per ounce.
- Bitcoin Price: Trading at $96,000, down 3.2% over the past week.
- Gold Demand: Central banks purchased 1,100 metric tons of gold in 2024.
Gold surged to a new all-time high on Monday, fueled by investor anxiety over economic uncertainty, while Bitcoin struggled to gain momentum as macroeconomic headwinds weighed on the broader crypto market.
Gold prices soared past $2,911 per ounce during Monday’s trading session, breaking previous records and continuing its bullish momentum amid increasing concerns over inflation, interest rate policies, and global economic stability. Analysts attribute gold’s strong rally, a 17.5% increase since the start of the year, to investors seeking traditional safe-haven assets amid geopolitical tensions and ongoing fears of a slowdown in major economies.
The latest report from the World Gold Council highlights that global gold reserves increased by 694 tons in the first ten months of 2024, continuing a record accumulation trend from previous years. Central banks—particularly in Asia and the Middle East—are leading the charge, reducing reliance on the U.S. dollar amid rising geopolitical risks and economic uncertainty.
“Total gold demand (including OTC investment) rose 1% y/y in Q4 to reach a new quarterly high and contribute to a record annual total of 4,974t.” – The report stated
Bitcoin’s Correlation with Gold Breaks Down
Historically, Bitcoin has been viewed as a hedge against inflation, often compared to gold. However, recent price trends indicate that the correlation between the two assets has weakened. While gold continues to attract capital inflows, Bitcoin remains largely range-bound, unable to break out of its current trading channel.
A major contributing factor is the ongoing uncertainty around central bank policies. The Federal Reserve has signaled a more cautious approach to rate cuts, dampening enthusiasm for risk assets. Meanwhile, gold has benefited from growing fears of economic slowdown and banking sector instability.
Market analysts are divided on Bitcoin’s next move. Some believe BTC is simply consolidating before another leg up, while others argue that a break below key support levels could trigger a larger correction.
Diverging Trends Amid Trade War Concerns
Global markets remain on edge after President Donald Trump announced a 25% tariff on all steel and aluminum imports on Sunday, reviving fears of a global trade war. The news sent U.S. steel and aluminum stocks surging in premarket trading—U.S. Steel and Nucor gained 8%, while Cleveland-Cliffs jumped 9%, and Alcoa rose 4%. Meanwhile, the broader market reaction has been mixed, with gold extending its record-breaking rally while Bitcoin continues to struggle for momentum.
A key factor behind gold’s continued rise is the aggressive accumulation by central banks. According to the World Gold Council, Poland, India, Turkey, and China were among the largest buyers in 2024, collectively adding over 280 tons of gold to their reserves. Western sanctions on Russia’s central bank reserves in 2022 marked a turning point for global reserve management, reinforcing gold’s role as a geopolitical hedge against economic uncertainty.
Additionally, a survey by the World Gold Council found that 69% of central banks plan to continue increasing their gold holdings, with 83% of industrialized nations citing it as a hedge against inflation and financial instability.
