The price of gold has surged to an unprecedented level following a recent interest rate cut by the United States Federal Reserve, prompting crypto analysts to speculate on when Bitcoin will experience a similar surge. According to GoldPrice.org, gold reached a record high of $2,629 per ounce on September 23, marking a gain of over 5% in the past two weeks. This significant increase in the commodity’s value can be attributed to the Fed’s interest rate cut of 0.5% on September 18, which provided a boost for gold. When interest rates are reduced, assets tied to Fed-set rates become less appealing, leading investors to seek alternative options such as gold as a means of diversification and protection against inflation.
The appetite for gold investments has also been fueled by global geopolitical risks, including ongoing conflicts between Russia and Ukraine, Israel and Hamas, and the upcoming US presidential election in November. Furthermore, the volume of gold purchases made by global central banks has tripled since Russia’s invasion of Ukraine in early 2022, as reported by Goldman Sachs on September 12. Analysts at the Wall Street investment bank predict that gold prices will reach $2,700 by early 2025, buoyed by further rate cuts by the Federal Reserve.
However, Peter Boockvar, the chief investment officer at Bleakley Financial Group, believes that gold has not yet reached its inflation-adjusted peak price. In 1980, gold reached a peak of $3,200 when accounting for inflation. Despite this, gold enthusiast Peter Schiff couldn’t resist taking a jab at digital assets in a post on X on September 23. He pointed out that while gold had reached another record high, few investors seemed to notice or care.
Bitcoin, often referred to as digital gold, has also experienced a price surge, increasing by 8.5% since the Federal Reserve’s rate decision. According to CoinGecko, the asset reached an intraday and four-week high of $64,660 during early trading on September 23. In a note to investors on September 22, Markus Thielen, the founder and CEO of 10x Research, stated that the likelihood of a major breakout for Bitcoin increases as we approach the pivotal October-to-March window. Thielen predicts that Bitcoin will reach a new all-time high before the end of 2024.
In summary, the price of gold has reached unprecedented levels due to the Federal Reserve’s interest rate cut, prompting speculation about Bitcoin’s potential for a similar surge. Gold has become an attractive investment option as a hedge against inflation and geopolitical risks. Despite its current record high, gold has yet to surpass its inflation-adjusted peak price. Meanwhile, Bitcoin has also experienced significant price growth and is expected to reach a new all-time high in the coming years.