The price of gold today continues to slump in the wake of Bitcoin’s rally, further COVID-19 vaccine news, and more. Although some see this as the end of gold’s rally, not everyone is so quick to say it’s over. So, the stock market is up today in hopes of the pandemic coming to an end. Additionally, Bitcoin broke past $19,000 on the day, and it might break its highest level of $19,783 this week. How does all this affect the price of gold today?
Stock Market and the Price of Gold Today
Seasoned investors know that as the stock market climbs, the gold price tends to fall and vice versa. Major market players tied to the welfare of the US’s economy rose sharply in November. This includes the Energy Select Sector SPDR Fund, SPDR S&P Bank ETF, and the Industrial Sector SPDR Fund. They each gained about 38%, almost 19%, and nearly 18% respectively.
Dave Nadig, the Chief Investment Officer and Director of Research at ETF Trends and ETF Database, expressed his views on the matter of the economy. In fact, Nadig suggested that with “very little chance” the economy would be back in full swing in six months, it may be better for investors to look back. This means that we should use the last six months to find trades that could work in the near term.
With this in mind, Nadig also noted that he doesn’t believe any stimulus checks would be released until February. This is due to the fact that there’s high friction between digital currency and the physical economy. As a result, there needs to be stimulus at the government level. How this will affect the price of gold today? Today gold is falling. However, in the coming months, there could be more market volatility. Therefore, he indicated that buying gold now could be good to hedge against that predicted volatility.
Bitcoin News Today: Breaking Past $19,000
At the time of press, Bitcoin gained nearly 5% in the last 24 hours. This incredible price climb began last week as it rose to $16,000, then $17K and $18K. Overnight, the Bitcoin price flew beyond $19,000 and it continues to rise to test its all-time high of $19,783.
It is worth noting that the CIO of BlackRock, Rick Rieder, would actually disagree with Nadig. BlackRock is the world’s largest asset manager. Specifically, Rieder told CNBC that Bitcoin could take the place of gold since it is more convenient and more liquid than the physical asset. Further support comes from Guy Hirsch on this, the US managing director of eToro. He introduced the idea that the 2020 bull market for Bitcoin invalidates the idea that Bitcoin is a “tulip bubble.” This is because,
“…tulips never had a second wave of buying the same way Bitcoin has.”
What else is directly influencing the Bitcoin price? Now that PayPal and CashApp allow people to trade with Bitcoin and other cryptos, it is possible this creates a more solid base for the digital currency. Consequently, this convenient access might insight new retail investors to enter the market and drive the price up further. Since miners do not seem to be liquidating yet, prices may continue to rise.
Finally, PayPal’s CEO Dan Schulman is bullish on it as he told Squawk Box on Monday. “I think that there’ll be more and more use cases for cryptocurrencies.” In addition to believing that bank digital currency is inevitable internationally, he noted this will make bitcoin more widely accepted, more stable, and perhaps more valuable over time. So where does this leave the price of gold today?
The Gold Market Woes – COVID-19, Bitcoin, and the Presidency
For the most part, as people are flocking to Bitcoin, they seem to be forgetting about gold. The gold price today lies around its lowest level since July, although it is still historically high. So the main reason the price of gold suffers today is the breakout of crucial horizontal support on $1850 USD/oz. This is a negative sign and is a sell signal for the market.
But what really caused this downturn? On top of Bitcoin and the positive economic news today, positive COVID-19 vaccine news makes waves in the economy. Many are eager to reopen and put the pandemic behind us. If the majority of the world is vaccinated within the next coming months, then some recovery may actually happen. In addition to this, the Trump administration officially begins to transition to Biden, despite Trump’s pushback and allegations of a rigged election. All this affects the price of gold today, but this does not mean the dust is settled yet.
Actually, Citi and Goldman Sachs analysts see the gold price remaining bullish in the longer term despite current trends. Citi Head of Commodities Research, Aakash Doshi, noted that the vaccine news may slow but not end gold’s bull cycle. He seemed to suggest that it is inevitable for prices to return to $2,000 levels in 2021. This is if the US monetary policy does not take an unexpected, aggressive turn.
Since the monetary policy keeps interest rates near zero for the foreseeable future, the only thing factor that could change this is a sudden, hawkish recourse. Considering Yellen is Biden’s choice for treasury secretary, rates might remain near zero. This is to avoid a double-dip recession as states and cities reimpose restrictions on businesses. Therefore, this tenuous future might be good for the price of gold in the log-run, just as Doshi appears to suggest. Finally, Yellen is widely considered a “Dove”, which can remain positive for gold and silver in the long run.
With the recent dip in the price of gold today, now could be a good time to buy in while precious metals are less expensive. Take a look at some of our new inventory for each metal, and do not forget to check out our Deals page to save even more! No matter where you are in the US, you can take advantage of our online store. We are always happy to provide you with numismatic coins and precious metal bullion in gold, silver, platinum, palladium, and rhodium.