Gold Hits Record, Bitcoin Climbs Amid Fed Cut Bets: Markets Wrap

Gold and Bitcoin Reach New Highs Amid Market Optimism

In Asian trading, gold surged to a record high of $2,135.39 an ounce, while Bitcoin pierced $40,000. This comes as markets showed little concern for Federal Reserve Chair Jerome Powell’s recent comments indicating that policymakers have no immediate plans to ease interest rates.

According to Kyle Rodda, a senior market analyst at in Melbourne, “Markets are piling in on the rate cut bets. Gold can run higher and will do so at the earliest sign of a recession.”

The surge in both gold and Bitcoin occurred despite the dollar’s slight increase and two-year Treasuries paring back some of their gains from Friday. Traders continue to speculate that the Fed could cut rates as early as March, with swaps pricing in a full reduction by May and projecting a full point of easing by December 2024.

Meanwhile, US stocks closed at their highest levels since March 2022, while two-year yields hit their lowest level since June. This comes as data indicates that American households are starting to pull back after a period of increased spending.

Shane Oliver, head of investment strategy and chief economist at AMP Ltd. in Sydney, noted that the recent rebound in shares has left them technically overbought and at risk of a consolidation or short-term pullback. However, he believes further gains are likely into year-end and early next year as inflation continues to ease and positive market seasonality kicks in.

On the cryptocurrency front, Bitcoin is nearing $41,000 and has seen a rebound throughout the year as bets on lower interest rates continue. Additionally, the industry is eagerly anticipating potential approval of US spot Bitcoin exchange-traded funds.

Looking ahead, key economic indicators this week will provide insights into the global economy, including Australian growth, Chinese inflation, and US non-farm payrolls data.

In summary, gold and Bitcoin have reached new highs in the face of market optimism, shrugging off concerns about potential interest rate adjustments. Despite technical indicators suggesting the possibility of a pullback, further gains are expected as economic data and market seasonality remain positive.

Historically, gold has been considered a safe-haven investment in times of economic uncertainty, while Bitcoin’s volatile nature continues to attract both institutional and retail investors.

The content of this article was created with the assistance of Bloomberg Automation and contributed to by Michael G. Wilson.

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