Gold steadies, bitcoin plunges as debasement trade rally comes to a halt
Gold (GC=F) prices stabilized on Wednesday after their worst intraday decline in more than 12 years, taking a break from one of this year’s hottest rallies.
Futures contracts for the yellow metal are hovering around $4,120 per ounce, shifting between negative and positive territory, after falling 5.5% in the previous session as investors locked in profits and the US dollar strengthened.
Prior to the sharp sell-off, gold had risen a whopping 65% year to date as strong global central bank demand and investors fled to the safe-haven asset to hedge against a decline in fiat currency depreciation trading. Wall Street strategists had warned of overbought conditions.
“We highlight the potential for volatility given the size and speed of the rally, but we believe precious metals should be supported by a combination of macroeconomic, fundamental and momentum-based factors,” Ulrike Hoffmann-Buchardi, chief investment officer for the Americas region at UBS, wrote on Wednesday.
Read more: Are you thinking of buying gold? Here’s what investors should pay attention to.
Rising demand for precious metals and ongoing political uncertainty, as well as the Fed being expected to make further interest rate cuts this year, will continue to be a headwind for the commodity as we head into the first quarter of 2026, the strategist said. He noted that given sticky inflation, real interest rates in the US could fall below zero, making the US dollar less attractive to investors and therefore increasing flows into precious metals.
“We continue to view gold as an effective portfolio diversifier and further gains towards our upside level of USD 4,700/oz are still possible should adverse macro and political developments emerge,” Hoffmann-Buchardi said. he wrote.
Fundstrat digital asset strategist Sean Farrell said on Wednesday that a pause in gold’s rise could signal turnaround opportunities for Bitcoin (BTC-USD), which is trying to stabilize after an unstable two-week stretch.
The world’s largest cryptocurrency fell nearly 3% on Wednesday, nearing $108,000 per token, reversing a three-day rally.
“I don’t think it’s a coincidence that we saw Bitcoin jump pretty violently at the same time we saw gold tumble,” Farrell said Tuesday evening.
Bitcoin rose from around $107,000 last Friday to a session high of $113,000 on Tuesday, giving renewed optimism that the recent cryptocurrency rout could be revisited.
The strategist noted that both assets have experienced a lead-lag relationship over the past few years.
