Gold’s bull run accelerated on Wednesday, with the yellow metal surging 6% to above $5,400 an ounce for the first time.
Silver and platinum posted even bigger gains, but with a market capitalization of around $40 trillion, gold remains the standout asset.
Gold’s big rally came after Federal Reserve Chairman Jerome Powell’s comments at a press conference following the central bank’s much-anticipated decision to keep the benchmark federal funds rate unchanged at 3.50% to 3.75%.
Asked directly about the rapid rise in gold and silver prices, Powell cautioned against over-interpreting the rise as a macro signal. “Don’t get too many macroeconomic messages,” he said, adding that while some may argue the Fed has lost credibility, “that’s not the case at all.”
“If you look at the picture of inflation expectations, our credibility is exactly where it needs to be,” Powell said. The golden bulls apparently had other things in mind.
Which Bitcoin?
Bitcoin $BTC$89,310.98 Meanwhile, bulls continued to watch on the sidelines as real gold once again significantly outperformed digital gold. Prices traded in an excruciatingly narrow range throughout the day, slowly declining in the wake of the Fed’s decision, and were recently trading flat for the past 24 hours at $89,000.
The prices of the remaining major cryptocurrencies followed similar movements.
U.S. stocks were also little changed on Wednesday as investors awaited results from Microsoft, Meta, Tesla and others.
Is Bitcoin losing its digital gold edge?
Despite the macro tailwinds that Bitcoin is often touted to benefit from as “digital gold”, such as a weak dollar and rising geopolitical risks, $BTC Despite its recent struggles, gold is up more than 90% in the past 12 months.
This contrast casts a shadow on Bitcoin’s role as a macro hedge, especially as the assets it was designed to compete with have outperformed, argued James Harris, CEO of yield platform Tesseract Group.
“We are clearly in a market regime where cryptocurrencies are underperforming some of the assets they are designed to replace,” Harris said in the note. “Some of that outperformance is almost certainly due to re-pricing of geopolitical and fiscal risks, but it also reflects gold regaining relative market share from Bitcoin.”
