Gold Nears ATH Again as Bitcoin Hits Historic Low—Rotation Ahead?

Gold prices edged higher on Tuesday, trading at $4,305 per ounce—within striking distance of October’s all-time high of $4,381.

The rally reflects a broader flight to safety as investors navigate uncertain monetary policy and seek inflation hedges. With markets pricing in a 76% chance of another rate cut in January, gold’s appeal as a non-yielding asset has only strengthened.

Historic Divergence Signals Potential Turning Point

The US dollar, near a two-month low during the Asian session, provided additional tailwinds for bullion. Gold has surged more than 64% year-to-date, marking its best annual performance since 1979. Federal Reserve rate cuts, persistent central bank buying, and steady inflows into gold-backed ETFs fueled the hike.

Holdings in gold-backed exchange-traded funds have risen every month this year except May, according to the World Gold Council, underscoring sustained investor appetite for the safe-haven asset. As rates decline, the opportunity cost of holding gold falls, making it more attractive compared to interest-bearing investments.

Meanwhile, Bitcoin keeps hovering around $86,000 after a sharp selloff triggered an hour-long $200 million in long liquidations on Monday. The leading cryptocurrency remains approximately 30% below its October peak of $126,210. While gold acts as a safe-haven asset in turbulent times, Bitcoin often trades like a risk asset, suffering outflows when investors seek stability.

The widening gap between gold and Bitcoin has caught the attention of market analysts. Crypto trader Michaël van de Poppe noted that Bitcoin’s Relative Strength Index against gold has dropped below 30 for only the fourth time in history.

Technical analysis from fellow analyst misterrcrypto supports this view. He shows that the BTC/Gold pair has been testing a long-term ascending support line for the fourth time since 2019. The Z-Score is -1.76, in oversold territory, and prior touches of this support level have led to substantial rallies.

Still, technical patterns do not guarantee future moves. The current macroeconomic environment differs from previous cycles, as inflation remains elevated and geopolitical risks continue to support demand for gold. The extent to which investors rotate from gold to Bitcoin remains uncertain.

Macro Factors in Focus

Markets are closely watching this week’s US economic data to fill a void created by a six-week government shutdown. The Bureau of Labor Statistics on Tuesday releases its long-awaited combined employment reports for October and November. However, key details will be missing—including October’s unemployment rate, resulting in the first-ever gap in that critical data series.

Economists project a 50,000 increase in payrolls and a 4.5% unemployment rate, consistent with a sluggish but stable labor market. Even moderate weakness in the figures would bolster the case for more rate cuts, according to Morgan Stanley strategist Michael Wilson.

The Fed delivered a 25-basis-point rate cut last week but signaled a likely pause amid persistent inflation. However, Fed Governor Stephen Miran said Monday that current above-target inflation does not reflect underlying dynamics, asserting that “prices are now once again stable.” Investors currently price in a 76% probability of another January cut.

Technical Outlook

Bitcoin options data reveals significant open interest concentrated around the December 26 expiry, with heavy positioning at the $100,000 strike. Analysts identify a gamma band spanning $86,000 to $110,000, suggesting heightened volatility as traders reposition heading into year-end.

Silver, which has more than doubled this year with a 121% gain, pulled back from Friday’s record high of $64.65 but remains near historic levels. The metal’s rally has been driven by tightening inventories, strong industrial demand, and its inclusion on the US critical minerals list.

As gold approaches new highs and Bitcoin consolidates near key support levels, the coming weeks may determine whether the historic divergence between the two assets resolves through rotation—or further dislocation.