Daily Crypto News

Cryptocurrency Turmoil, Uncertainty About Interest Rates Push Gold Prices Above $2,000

Key Takeaways

  • Gold prices hit their highest level since May as investors flock to the “safe haven.”
  • The turmoil in cryptocurrency exchanges is pushing investors toward gold.
  • Despite recent signs that the Federal Reserve might be done raising interest rates, investor confidence wavered with the release of the minutes from the last meeting, making gold more attractive.

Turmoil in the always volatile world of cryptocurrency may be pushing some investors to abandon “digital gold” for the real stuff.

The price of gold broke the $2,000 per ounce mark Tuesday afternoon, according to prices tracked by online precious metals retailer JM Bullion. At its high of $2,007.25, it was the highest price since May.

Warning signs of faltering consumer spending from retailers’ earnings reports in the morning, and criminal charges against a prominent figure in the cryptocurrency business helped drive up interest in gold, which is often viewed as a “safe haven” asset, said Collin Plume, CEO of Noble Gold, a precious metals investing firm.

“There’s some gloom in the market and crypto industry today,” Plume said in an email. “Like always, investors run to that one asset that they can count on, gold.”

Bitcoin prices fell Tuesday after Changpeng Zhao, founder of Binance, the world’s largest cryptocurrency exchange, pleaded guilty to federal charges of money laundering, in a deal that involved the company paying $4.3 billion in fines.

The price of gold has also been propped up lately by uncertainty in markets about whether the Federal Reserve would raise its benchmark interest rate again to fight inflation, said Joe Cavatoni, chief market strategist for the World Gold Council. That’s spurred central banks around the world to buy gold, with the third quarter of 2023 seeing the second-highest gold purchases on record for any third quarter, according to the council’s data.

“Throughout 2023, we have seen the price of gold supported by global demand particularly from central banks due to gold’s safe haven status as markets awaited more clarity on the direction interest rates are likely to head in 2024,” Cavatoni said in an email.

Last week, traders had completely written off the idea of another Fed rate hike, with the odds of one taking place in the next few months priced at zero percent, according to the CME Group’s FedWatch tool, which forecasts rate hikes based on Fed futures trading data. 

The probability of a rate hike at the Fed’s next meeting in December bounced back to 5% Tuesday afternoon, as markets digested the newly released minutes from the Fed’s latest meeting in November. 

The minutes showed that Federal Reserve officials believe monetary policy may need to remain restrictive to bring down inflation. However, data released since the last meeting has showed interest rates are having the intended effect on the economy.

Read More: Cryptocurrency Turmoil, Uncertainty About Interest Rates Push Gold Prices Above $2,000

Disclaimer:The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website’s content as such. NewsOfBitcoin.com does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.