Quick Bite | Gold and Bitcoin off to the races

Gold and digital gold (Bitcoin) are both near all-time highs. Bitcoin believers might feel vindicated to see the cryptocurrency rallying alongside the traditional store of value. The digital asset appears to have replaced gold’s appeal by climbing more than 40% since Bitcoin ETFs launched in January, with their inflows possibly coming at the expense of gold ETFs, which have had net outflows.

Source: JC Parets 

Source: Bloomberg 

The key ingredient for a sustained rally in the gold price would be evidence that interest rates are going down. Gold tends to perform well when interest rates are declining.  Earlier approaches to $2,100 came at points when rate cuts appeared to be imminent. As recent data have shown mixed signals on inflation, that conviction has dwindled. Regardless, the overwhelming expectation of the US Federal Reserve’s next action is a cut rather than a hike – most likely in June or July.

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