Gold has come under increasing pressure while Bitcoin continues to soar, raising concerns about the precious metal’s future as a primary hedge against inflation. The latest data reveals that gold, which has long been the go-to asset for safeguarding wealth, dropped to a one-month low of $2,543 on November 14, just after the U.S. Consumer Price Index (CPI) report indicated an expected 2.6% inflation rate in October.
Although gold briefly rebounded to $2,623, it remains down 2.6% over the past month, reflecting growing investor sentiment that may be shifting away from traditional safe havens.
In stark contrast, Bitcoin — often dubbed “digital gold” — surged to an all-time high of over $93,400 following the release of the CPI data. This highlights the growing appeal of cryptocurrency as a viable alternative to gold in the eyes of many investors.
The shift could be accelerated by Donald Trump’s continued emphasis on cryptocurrency, particularly Bitcoin. According to Maruf Yusupov, co-founder of the gold-backed stablecoin Deenar, Trump’s focus on reducing taxes, tariffs, and promoting crypto assets could significantly disrupt gold’s long-standing position as a hedge against inflation. Yusupov explained that Bitcoin’s growing popularity could lead investors to divert funds from gold, fueling a potential rally in the digital currency.
“The growing prominence of Bitcoin may diminish gold’s role as a hedge, making it less attractive to investors,” Yusupov told crypto.news. He also pointed to the Federal Reserve’s hawkish stance on interest rates, which could dampen gold’s appeal further by making U.S. Treasury yields a more attractive investment.
Additionally, Yusupov suggested that the strengthening U.S. dollar might further erode gold’s status, as it would reduce the perceived need for alternative hedges.
The situation has been further complicated by recent political developments. On November 17, Republican Senator Cynthia Lummis proposed that the U.S. government sell some of its gold reserves to buy Bitcoin as part of a new national reserve strategy. According to Gold.org data, the U.S. held 8,133 tons of gold reserves as of Q2 2024, making it the largest holder globally.
With Bitcoin’s meteoric rise and increasing mainstream acceptance, the future of gold as an inflation hedge is becoming increasingly uncertain. Investors will be watching closely to see whether Bitcoin continues to challenge traditional safe-haven assets in the coming months.
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