Gold Approaches Its Highest Level Again While Bitcoin Reaches Its Lowest—Is a Rotation Coming?

Gold prices rose slightly on Tuesday, trading at $4,305 per ounce—close to its all-time high in October at $4,381.
This increase reflects a broader flight to safety as investors navigate uncertain monetary policies and seek to hedge against inflation. With markets pricing in a 76% chance of another rate cut in January, gold’s appeal as a non-yielding asset has grown.
Historical Divergence Signals a Potential Turning Point
The US dollar, which was near its lowest level for the month during the Asian session, provided additional tailwinds for the metals. Gold has gained more than 64% since the start of the year, marking its best annual performance since 1979. Federal Reserve rate cuts, continued central bank purchases, and ongoing inflows into gold-backed ETFs have driven the price higher.
Gold ETF holdings have increased every month this year except May, according to the World Gold Council, highlighting ongoing investor appetite for this safe-haven asset. As prices decline, the opportunity cost of holding gold decreases, making it more attractive compared to interest-bearing investments.
Meanwhile, Bitcoin remains around $86,000 after a sharp sell-off triggered long liquidations worth $200 million on Monday. The leading cryptocurrency is still about 30% below its October peak of $126,210. While gold acts as a safe haven during tough times, Bitcoin often trades as a risk asset, experiencing outflows when investors seek stability.
The widening gap between gold and Bitcoin has caught the attention of market analysts. Cryptocurrency trader Michael Van De Poppe pointed out that Bitcoin-to-Gold RSI has fallen below 30 for only the fourth time in history.
Technical analysis from another analyst, Misterrcrypto, supports this view. The BTC/Gold pair is testing a long-term ascending support line for the fourth time since 2019. The Z-Score indicator is at -1.76, in oversold territory, and previous touches of this support level have led to significant rebounds.
However, technical patterns do not guarantee future movements. The current macroeconomic environment differs from previous cycles, with inflation remaining high and geopolitical risks continuing to support gold demand. The extent of investor rotation from gold to Bitcoin remains uncertain.
Macroeconomic Factors in Focus
Markets are closely watching US economic data this week to fill the gap left by a six-week government shutdown. The Bureau of Labor Statistics will release the October and November employment reports on Tuesday. However, key details—such as the October unemployment rate—will be missing, marking the first gap in this vital data series.
Economists expect a 50,000 increase in payrolls and a 4.5% unemployment rate, consistent with a slow but steady labor market. Even moderate weakness in the numbers could bolster the case for further rate cuts, according to Morgan Stanley strategist Michael Wilson.
The Federal Reserve cut rates by 25 basis points last week but signaled a possible pause amid ongoing inflation. However, Fed Chair Jerome Powell stated on Monday that current inflation above the target does not reflect underlying dynamics, emphasizing that “prices have stabilized again.” Investors currently assign a 76% probability of another cut in January.
Technical Outlook
Bitcoin options data reveal significant open interest centered around the December 26 expiry, with heavy positions at the $100,000 strike. Analysts identify a gamma range between $86,000 and $110,000, indicating increased volatility as traders reposition ahead of year-end.
Silver has fallen more than 50% this year, with a gain of 121%, from its high on Friday at $64.65, but remains near historic levels. The rally has driven stockpiles to tighten, supported by strong industrial demand and inclusion in the U.S. critical metals list.
As gold approaches new highs and Bitcoin consolidates near key support levels, the coming weeks may determine whether the historic divergence between the two assets resolves through rotation—or if volatility will intensify.