The gold bull market kicked into higher gear on Wednesday, with the yellow metal rising 6% to above $5,400 an ounce for the first time.
Silver and platinum posted even bigger percentage gains, but gold, with a market cap somewhere in the $40 trillion range, was certainly the standout asset.
A significant portion of gold’s gains came after comments by Federal Reserve Chairman Jerome Powell at a press conference following the central bank’s universally expected decision to keep its benchmark interest rate range steady at 3.50% 3.75%.
Asked directly about the rapid rise in gold and silver prices, Powell cautioned against over-interpreting the rally as a macro signal. “Don’t take too much notice [that] macroeconomic,” he said, adding that while some might argue the Fed is losing credibility, “that’s simply not the case.”
“If you look at where inflation expectations are, our credibility is right where it needs to be,” Powell said. Gold bulls obviously thought otherwise.
Where bitcoin?
Bitcoin bulls, meanwhile, continued to watch from the sidelines as real gold once again significantly outperformed its digital counterpart. Prices traded in an eerily tight range during the day, falling after the Fed decision and recently trading at $89,000, flat over the past 24 hours.
Prices across the rest of the major cryptos followed similar action.
US stocks were also little changed on Wednesday as investors awaited earnings from Microsoft, Meta and Tesla.
Is bitcoin losing its digital edge?
Despite the macro tailwinds often touted as benefiting bitcoin as “digital gold” — including a weaker US dollar and rising geopolitical risk — BTC has struggled recently, while gold is now up more than 90% over the past 12 months.
The contrast casts a shadow over bitcoin’s supposed role as a macro hedge, especially as the assets it was designed to compete with are outperforming, argued James Harris, CEO of yield platform Tesseract Group.
“We are clearly in a market regime where crypto is underperforming some of the assets it was designed to replace,” Harris said in a note. “Part of this outperformance is almost certainly a repricing of geopolitical and fiscal risks, but it also reflects gold pulling back some relative market share from bitcoin.”
