Gold investors had a lot to smile about as the metal’s price continued to climb, reaching a new record. The move was spurred partly by worries over the coronavirus pandemic and US-China tensions. Despite its recent spike in price, it failed to beat Bitcoin which has been able to surge past $10,000 once again.
Spot gold rose by 2% to $1,936.81 per ounce by 3:15 p.m. EDT. Prior to that, a record was broken as the spot price touched $1,945.10 per ounce, beating the previous record made in September 2011.
A struggling US currency, rising US-China tensions, and the coronavirus pandemic are some of the identified causes of the heightened demand for gold.
According to Stephen Innes, the chief global markets strategist at AxiCorp,
“Gold is the clear beneficiary of safe haven demand,”
Despite the good fortune for gold investors that have recently been realized, they may also be experiencing significant opportunity costs as Bitcoin has risen over $10,000 once again, presenting far higher returns for investors than gold.
Bitcoin recently jumped above $10,000 for the first time since early June. Over the last 7 days, the cryptocurrency rose by nearly 11% while equity markets struggled to gasp for air in a sea of uncertainty clouded by the global coronavirus pandemic.
Rob Sluymer, technical strategist at Fundstrat Global Advisors LLC says,
“We remain positive on the overall precise structure for Bitcoin and do expect it push through US$10,000-$10,500 as part of its longer term bullish technical profile,”
Despite its previous crash to under $4,000 Bitcoin was able to recover at a faster pace than most other investments such as gold, equities, and currencies.
In a new report from JPMorgan called, “Cryptocurrency takes its first stress test: Digital gold, pyrite, or something in between?” strategists at the bank suggest that the ability of the cryptocurrency to survive the severe disruption in March is an indication of its longevity as an asset class.