Gold rose nearly 1% on Monday, while risk-on assets such as cryptocurrencies and stocks fell amid macro uncertainty.
Gold futures are trading at $4,262.35, just 2.95% below the all-time high of $4,381.44. The precious metal is within $130 of a new all-time high.
Bitcoin’s overnight sell-off reduced the market capitalization of all cryptocurrencies by more than 6% on the day, from $3.191 trillion to $3.016 trillion. Bitcoin It fell 6% on the day and is currently trading at just under $86,000, according to CoinGecko data.
Reflecting the bearish sentiment of US stock investors, the S&P 500 index fell 0.5% in pre-market trading.
Ilya Otichenko, chief analyst at CEX.IO, said the steady rise in gold prices in November can be attributed to “heightened investor caution and the recent rise in expectations for a December rate cut.” decryption.
Gold is supplied by Fed speculation
Otichenko said growing speculation that the next Fed chair will be more dovish is driving demand for gold.
The probability of a quarter-point rate hike in December hovers around 88%, according to the CME FedWatch tool, but investors remain cautious due to data gaps related to the government shutdown.
Prediction Market Myriad Users (Owned) decryptionDastan, its parent company, puts an 86% chance that the Fed will cut interest rates by 25 basis points in December, but only a 9% chance that Jerome Powell will step down as Fed chairman by the end of the year.
“As a result, many financial institutions are either risk-averse or remain in wait-and-see mode,” the analyst added, suggesting Wednesday’s ADP jobs report and Friday’s core PCE data will provide “a clearer signal on the Fed’s next steps.”
Otichenko noted that the Fed has ended quantitative tightening and said, “Risk assets are likely to be weak as the increased liquidity from the end of QT will take time to reach the market.”
Quantitative tightening is a change in monetary policy in which a central bank shrinks its balance sheet by reducing the money supply. This is accomplished by allowing assets such as Treasury and mortgage-backed securities to mature without reinvesting the principal.
