Following a decrease in the interest rate by the United States central bank, the price of gold has surged to its highest level ever, prompting crypto analysts to speculate on when Bitcoin could experience a similar increase.
On September 23, GoldPrice.org reported that the price of gold had reached a record-breaking $2,629 per ounce, marking a gain of over 5% in the past two weeks. This significant movement in the commodity was a direct result of the Federal Reserve’s 0.5% interest rate cut on September 18, which provided a boost to the metal.
A decrease in interest rates makes assets linked to the Fed-set rates, like short-term government bonds, less appealing, while increasing the popularity of inflation hedges such as gold as a diversification option. Geopolitical tensions around the world, including conflicts between Russia and Ukraine, Israel and Hamas, and the upcoming US election in November, have also contributed to the increased interest in gold investments.
Furthermore, a report by Goldman Sachs on September 12 revealed that global central bank purchases of gold had tripled since Russia’s invasion of Ukraine in early 2022. The investment bank’s researchers predicted that gold prices would reach $2,700 early next year, driven by further Fed rate cuts.
Despite this, Peter Boockvar, the chief investment officer at Bleakley Financial Group, pointed out that gold has not surpassed its inflation-adjusted peak of $3,200 in 1980. Nevertheless, gold advocate Peter Schiff took the opportunity to criticize digital assets in a post on X on September 23, claiming that few investors paid attention to gold hitting another record high.
Meanwhile, Bitcoin, often referred to as digital gold, has also experienced a rise, with an 8.5% increase since the Fed rate decision. The asset reached an intraday and four-week high of $64,660 during early trading on September 23, according to CoinGecko.
In a note to investors on September 22, Markus Thielen, the founder and CEO of 10x Research, stated, “The likelihood of a major breakout increases as we near the pivotal October-to-March window,” before predicting a new all-time high by the end of this year.