Gold Price Soars Record High After Fed Rate Cut – Will Bitcoin Follow?
Gold Price – The price of gold has skyrocketed to an all-time high after the United States central bank implemented an interest rate cut, sparking a wave of predictions from crypto analysts about when Bitcoin might mirror this trend.
According to data from GoldPrice.org, gold surged to a record-breaking $2,629 per ounce on Sept. 23, following a strong 5% rise over the last two weeks. This movement comes on the heels of the Federal Reserve’s decision to lower interest rates by 0.5% on Wednesday, Sept. 18, giving gold a major boost.
Why Is Gold Soaring?
Interest rate reductions tend to make assets tied to Fed-set rates—like short-term government bonds—less appealing, while inflation hedges such as gold gain popularity as diversification options. Additionally, geopolitical uncertainties, including the ongoing conflicts between Russia and Ukraine, Israel and Hamas, and the upcoming U.S. presidential election in November, have heightened the demand for safe-haven assets like gold.
In fact, a recent Goldman Sachs report dated Sept. 12 revealed that global central banks have tripled their gold purchases since Russia’s invasion of Ukraine in early 2022. Researchers at the investment bank have predicted that gold could climb to $2,700 by early next year, largely due to expectations of further Fed rate cuts.
However, Peter Boockvar, the chief investment officer at Bleakley Financial Group, noted that despite the surge, gold hasn’t yet surpassed its inflation-adjusted peak of $3,200 from 1980.
Gold’s Rise vs. Bitcoin’s Potential
Prominent gold advocate Peter Schiff couldn’t miss the opportunity to criticize the rise of digital assets. On Sept. 23, Schiff posted on X (formerly Twitter) that while gold has hit another record high, most investors are paying more attention to Bitcoin, causing them to overlook gold’s significant gains.
“Gold just hit another record high, but few investors notice or care,” Schiff remarked. “With so much attention focused on Bitcoin, investors are not only missing out on gold’s gains but the significance of the rise.”
Meanwhile, Bitcoin (BTC)—often referred to as digital gold—has been on the rise as well. Following the Fed’s rate cut, Bitcoin saw an 8.5% increase, reaching an intraday high of $64,660 during early trading on Sept. 23, according to CoinGecko.
Bitcoin’s Outlook: A Breakout on the Horizon?
In a note sent to investors on Sept. 22, Markus Thielen, founder and CEO of 10x Research, indicated that Bitcoin’s performance is aligning with its usual seasonal pattern, raising the likelihood of a major breakout in the coming months.
“The likelihood of a major breakout increases as we near the pivotal October-to-March window,” Thielen commented, predicting that Bitcoin could hit a new all-time high by the end of 2024.
Thielen pointed out that Bitcoin’s 2024 performance has closely mirrored its trajectory in previous years, particularly in 2023, and he urged traders to anticipate a significant surge in Q4 2024.
Final Thoughts: Gold and Bitcoin’s Path Forward
As gold continues its historic rise, largely driven by geopolitical concerns and central bank strategies, Bitcoin is showing signs of following suit. While traditionalists like Peter Schiff remain skeptical of crypto’s potential, analysts like Markus Thielen see room for significant growth in Bitcoin’s price, potentially reaching new record highs by the end of the year.
Whether Bitcoin can indeed follow gold’s trajectory will be something investors across both markets will closely monitor as we approach the end of 2024.
FAQ: Gold and Bitcoin After the Fed Rate Cut
Why did gold prices reach a record high?
Gold prices surged to a record $2,629 per ounce following a 0.5% interest rate cut by the U.S. Federal Reserve. Lower interest rates reduce the appeal of assets like bonds, making gold a more attractive hedge against inflation and geopolitical risks. Additionally, global central bank purchases of gold have tripled since Russia’s invasion of Ukraine, further boosting demand.
How does a Fed interest rate cut affect gold prices?
When the Federal Reserve lowers interest rates, assets tied to short-term returns, like government bonds, become less appealing. As a result, investors often shift towards safe-haven assets like gold, which tend to retain or increase value during times of economic uncertainty.
Leave a comment