Gold prices fell monthly on Wednesday, highlighting an increase in investors’ appetite for risk-on assets like Bitcoin amidst cooling trade tensions between the US and China.
Gold prices fell 9% per ounce to $3,185, down from an all-time high of $3,500 in mid-April, moving from $3,185. According to Coingecko data, Bitcoin’s price rose 17% from $88,200 to $103,600 over the same period.
The difference between gold and bitcoin became more apparent as the US and China are negotiating productive trade. Earlier this year, the escalation of trade tensions had spiralled global markets for weeks.
On Monday, the US said it would effectively reduce taxes on Chinese imports from 145% to 30%. China then said it would cut tariffs on US goods from 125% to 10%. The 90-day amendment took effect on Wednesday, according to the joint statement.
According to economist and longtime Bitcoin critic Peter Schiff, Gold faces some selling in the latest rally, which usually occurs early in the US trading sessions. In a previous Twitter X post, he described it as a sign of gold “moving from us to foreign ownership.”
Bitcoin shows strength against US stocks during President Donald Trump’s trade war. However, gold has outperformed the original cryptocurrency so far this year, with Bitcoin increasing by around 10% since January and gold rising by 23%.
Analysts say Bitcoin’s portrayal as a “safe shelter” asset has been reinforced recently by concerns about the collapse of the US dollar and weakening greenback. Similar factors may be active for money, with de-escalation between the US and China currently at the centre.
In April, China’s gold exchange sales funds recorded the strongest month, attracting $6.4 billion, according to Leisia, head of China’s research at the Trade Association World Gold Council. In a study published Wednesday, he wrote, “The unprecedented surge in demand is driven primarily by attractive local gold prices performance, (and) concerns about the US-China trade war.”
Jia noted that “inflows slowed down at the beginning of May,” and said demand could cool in the short term with further weakening of trade tensions between the US and China. Still, long-term economic and geopolitical risks are one of the factors that can lock in gold demand over the long term, he added.
Spot Bitcoin ETF faced a dramatic leak earlier this year, but the reversal comes with a new high watermark. On Tuesday, net inflows exceeded $41 billion since last year’s Wall Street debut.
Edited by Stacy Elliott.