Gold has continued its recent weakness, with prices falling below the 200-day moving average for the first time since October 2023. Meanwhile, the Bitcoin-to-gold ratio has rebounded by 3% in the past 24 hours, prompting market attention to whether the relative strength of the two assets is shifting.
Gold enters a technical bear market
According to reported data, gold prices have fallen more than 20% from their record high of $5,600 per ounce in January of this year, and are currently below $4,300. The 200-day moving average is generally regarded as a long-term trend indicator, and breaking below this level often means that the previous upward trend has slowed significantly.
This pullback occurred after a significant surge in gold prices. Since October 2023, gold had risen from less than $2,000 per ounce to a record high, a cumulative increase of nearly 200%. A key factor driving this surge was the market's previous bet that increased fiscal spending, rising debt, and a loose monetary environment would weaken the purchasing power of fiat currencies, thereby increasing demand for scarce assets.
A stronger dollar weighed on risk assets.
Stronger-than-expected U.S. jobs data released last week has prompted the market to re-priced in a higher probability of Federal Reserve tightening. According to the CME FedWatch tool, the market is currently betting that the Fed may raise interest rates by 25 basis points in December, bringing the federal funds rate range to 3.75% to 4.00%.
The US Dollar Index (DXY) has also climbed back above 100. Typically, a stronger dollar tightens global financial conditions and puts pressure on dollar-denominated commodities, gold, and crypto assets.
Silver is also weakening in tandem. The report indicates that silver is currently testing support near its 200-day moving average, around $67 per ounce. Due to its greater volatility, silver is often considered a more resilient version of gold.
Bitcoin to gold ratio rebounds
As gold prices retreated, Bitcoin rebounded to around $63,000, pushing the Bitcoin-to-gold ratio up to 14.72 ounces. This metric measures how many ounces of gold one Bitcoin can buy.
However, this ratio is still about 70% lower than the previous high of around 41 ounces in December 2024. The report also mentioned that the ratio encountered resistance near the 200-day moving average last month, after which Bitcoin briefly fell below $60,000. Nevertheless, the indicator is currently still higher than the low point in February of this year, indicating that Bitcoin's performance relative to gold has recovered somewhat.
From the current market environment, a stronger US dollar and rising expectations of interest rate hikes remain the main sources of pressure. However, after gold entered a technical bear market, the relative performance between Bitcoin and gold is once again becoming a key focus of market observation.
