Gold’s record run took a breather this week, snapping an eight-week winning streak as traders took profits ahead of the Federal Reserve’s October policy decision.
The pullback dampened demand for safe-haven assets and, for the first time in weeks, brought some attention back to risky assets, notably bitcoin. .
Spot gold fell more than 6% from its all-time high above $4,380/ounce reached on Monday, settling near $4,120 over the weekend. The decline was driven by profit-taking, large outflows from exchange-traded funds (ETFs) and a change in tone regarding trade relations between the United States and China.
Officials from the two countries said they had reached a “preliminary consensus” on key trade issues, allaying fears of a new tariff cycle that had fueled the metal’s rise.
“The threat of 100 percent tariffs on Chinese goods is effectively averted,” U.S. Treasury Secretary Scott Bessent said Sunday after two days of negotiations in Malaysia that paved the way for a broader deal between President Trump and President Xi Jinping.
The more favorable macro backdrop, combined with expectations that the Fed would cut rates by another 25 basis points this week, has dulled the shine of gold’s parabolic rally. Silver and platinum also fell sharply, a sign of a reset ahead of Wednesday’s decision.
But the timing could prove fortuitous for BTC.
After lagging gold for most of the quarter, Bitcoin gained more than 5% last week, reclaiming the $113,500 level and breaking out of a tight month-long range.
The move comes as the BTC/gold ratio – a measure of the relative value of Bitcoin compared to the yellow metal – reached its most oversold level since almost three years earlier, according to CoinDesk analyst Omkar Godbole.
The ratio’s 14-day relative strength index (RSI) fell to 22.20 last week, below its February low and the weakest since November 2022. Historically, such extremes in the BTC/gold ratio have coincided with local lows for Bitcoin, often followed by periods of outperformance as traders return to higher beta assets once macro fear subsides. attenuated.
