(London) Gold hit a historic high on Monday, pushed by the prospects of a Fed rate cut, when bitcoin was trading above $40,000, galvanized by hopes of an imminent approval of a new general public placement.
Around 6:40 a.m. EST (12:40 p.m. Paris), gold was trading at $2,069.70 an ounce, shortly after soaring to $2,135.39, its all-time high .
“Falling Treasury yields and a weak U.S. dollar have […] caused gold prices to surge,” says Michael Hewson, an analyst at CMC Markets.
When investors believe that the American central bank (Fed) will raise its rates, they prefer government bonds and the dollar to gold, another safe haven. Conversely, future rate cuts benefit gold, to the detriment of the greenback and bonds.
“Growing expectations of a rate cut by the Federal Reserve during the first quarter of 2024” have thus benefited the yellow metal, says Ricardo Evangelista of ActivTrades, against a backdrop of “latent geopolitical instability in the Middle East”.
On the cryptocurrency side, bitcoin exceeded $40,000 on Monday, pushing up to $42,144.36, a highest price since April 2022, stimulated by hopes that the United States will soon approve a new investment general public which could further normalize this asset in the eyes of investors.
Shortly after reaching its peak, bitcoin was still climbing 7.20% to $41,592.
“Optimism continues to grow around anticipated approvals of bitcoin ETFs by the SEC,” the Securities and Exchange Commission, says James Harte, an analyst at Tickmill.
A “Bitcoin ETF spot,” an investment product that would directly track the price of cryptocurrency, would allow a larger portion of the general public to invest in cryptocurrency without having to purchase it directly.
“Although the SEC has delayed a decision on the current applications until next month, investors are generally optimistic that these approvals will be obtained, which would pave the way for a new wave of demand” for bitcoin, continues Mr. Harte.
“ETF speculation will continue to drive behavior in the crypto market this week,” notes Simon Peters of eToro “as investors believe in the transformative impact that opening the market to institutional investors will have on the ecosystem “.
The dollar held steady against the euro on Monday, still influenced after Friday’s speech by Fed President Jerome Powell.
However, he warned the markets on Friday that it is too early to anticipate a reduction in interest rates, and that the Fed even stands ready to raise them further if necessary in the face of inflation.
But for Ipek Ozkardeskaya, analyst at Swissquote “investors have carefully extracted all the accommodating elements from Powell’s speech.”
US key rates have been “taken deep into restrictive territory”, and “this strict monetary policy is putting downward pressure on economic activity and inflation”, he indicated, for example.
The dollar gained some 0.09% to 1.0874 dollars per euro.
