The bull market for gold intensified further on Wednesday, with gold prices soaring 6%, surpassing $5,400 an ounce for the first time.
Silver and platinum have gained more, but gold, with a market capitalization of around $40 trillion, is undoubtedly the standout asset.
Gold prices surged following comments from Federal Reserve Chairman Jerome Powell at a press conference, ahead of a widely expected decision to keep the benchmark federal funds rate steady at a range of 3.50% to 3.75%.
When asked directly about the rapid rise in gold and silver prices, Powell warned against reading too much into a macro signal. “Don’t take in too much information [that] From a macroeconomic perspective,” he said, adding that while some may believe the Fed is losing credibility, “that’s not the case. “
“If you look at inflation expectations, our credibility is correct,” Powell said. Gold bulls clearly don’t think so.
Where does Bitcoin go from here?
Bitcoin Meanwhile, bulls continue to watch from the sidelines as physical gold once again significantly outperforms its digital counterpart. Prices have been trading within an extremely tight range throughout the day, edging lower following the Fed’s decision and most recently trading at $89,000, unchanged over the past 24 hours.
Prices of other major cryptocurrencies followed similar trends.
U.S. stocks were also little changed on Wednesday as investors awaited earnings reports from companies including Microsoft, Meta and Tesla.
Is Bitcoin losing its digital gold edge?
Despite the macro tailwinds often touted in favor of Bitcoin’s “digital gold” — including a weaker U.S. dollar and rising geopolitical risks — Bitcoin has struggled recently, while gold has gained more than 90% in the past 12 months.
James Harris, CEO of yield platform Tesseract Group, believes the contrast casts a shadow on Bitcoin’s purported macro-hedging role, especially given the outperformance of the assets it is designed to compete with.
“We are clearly in a market regime where cryptocurrency is lagging some of the assets it aims to replace,” Harris said in a report. “Part of this outperformance is almost certainly due to the repricing of geopolitical and fiscal risks, but it also reflects gold taking back some relative market share from Bitcoin.”
