Gold Prices Plummet as Bond Yields Soar
Gold prices have hit a nine-month low, dropping to $1,858 per ounce. The decline over the past five days totals 2.8%. Silver has also experienced a sharp decline, losing 6.6% over the past month and 2.9% in the last five days. Many attribute this downward trend to the hawkish monetary policies of the U.S. Federal Reserve.
The Fed’s quantitative tightening and high interest rates are causing bond yields to rise, strengthening the U.S. dollar. This is happening even amidst a gloomy economic outlook. Peter Boockvar from Bleakley Advisors noted that the “epic sovereign bond bubble continues to unwind.”
As long- and short-term bond yields converge, financial conditions are expected to tighten. Subadra Rajappa from Société Générale predicts that real yields and commodity prices will rise, putting pressure on markets like mortgages and credit.
ANZ Bank Predicts Gold’s Resurgence
Economists at ANZ Bank suggest that gold may lose its appeal until the U.S. central bank changes its stance on interest rates. However, they anticipate a resurgence in gold’s value next year as the strength of the U.S. dollar weakens.
The analysts at ANZ Bank note that gold tends to perform well during easing cycles and outperforms during rate hikes. They expect the USD to weaken in 2024 due to anticipated rate cuts and slower economic growth.
Bitcoin Rises Amid Economic Uncertainty
While gold prices decline, bitcoin has seen an increase in value, surpassing $27K per unit on September 29. Bitcoin bulls have driven market prices up despite economic ambiguity, leading traders to accumulate profits. The rise in bitcoin’s value mirrors the positive performance of U.S. benchmark indices and suggests a modest increase in futures markets.
Hot Take: Gold Prices Plummet as Bitcoin Gains Ground
Gold prices are currently at a nine-month low, dropping to $1,858 per ounce. This decline is attributed to the hawkish monetary policies of the U.S. Federal Reserve, which have led to soaring bond yields and a strengthening U.S. dollar. In contrast, bitcoin has experienced an increase in value, reaching over $27K per unit. As economic uncertainty persists, investors are turning to bitcoin as a potential alternative investment. While gold may regain its appeal in the future, bitcoin’s current rise reflects its growing popularity and potential as a digital asset.
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