As bitcoin fell, gold soared

Gold futures rose nearly 3% on January 4 to above $1900 an ounce, a two month high. Prior to that, the US dollar continued to weaken as real yields fell in the US. As of January 4, gold futures for February delivery on the New York Mercantile Exchange rose $51.50, or 2.7%, to $1946.60 an ounce. “Investors are looking for assets that will benefit from rising inflation.” Said Giovanni staunovo, an analyst at UBS Group AG. “In addition, the inflation factor also played a supporting role in today’s trading.” Another reason for gold’s rise is that after three consecutive quarters of decline, the ice dollar index has fallen to its lowest level since 2018, as expectations of a global economic recovery have boosted demand for risky assets. In addition, gold ETFs (exchange traded funds) ushered in a new round of capital inflows following outflows in November and the first few weeks of December 2020, which also supported gold prices. Bitcoin, on the other hand, has seen its biggest decline since March 2020, as the rise in cryptocurrency prices has been suspended. Supporters of the world’s largest cryptocurrency argue that bitcoin is powerfully taking gold’s position as a hedge against dollar weakness and inflation, pointing to evidence that institutional investors are increasingly interested in the currency.

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