BTC/USD one-hour chart. Source: TradingView
Gold is currently owning the spotlight as it pushed higher again on Tuesday, trading near $4,080 an ounce it's highest reach since June 2022, this happened after investors weighed diplomatic movement on reopening the Strait of Hormuz. On the other hand, the Federal Reserve has started sounding a little less eager to cut down rates than markets had expected.
But the biggest reason gold is still holding up looks familiar, China. According to market analyst Kuptsikevich, Chinese gold-backed ETFs have now attracted inflows for 14 consecutive days, with institutional investors continuing to buy even as bullion remains comfortably above the key $4,000 level. The People's Bank of China hasn't eased up either, extending its streak of monthly gold reserve purchases to well over a year.
What makes this rally different from the rest is that it's happening for reasons few traders were expecting. For months, the consensus was that the Fed would keep cutting rates. Instead, stubborn inflation has forced markets to rethink that view. As of this week, traders are assigning a 57% chance of a rate hike rather than a cut after Fed Chair Kevin Warsh's July 29 press conference left more questions than answers. Meanwhile, core PCE inflation is still sitting at 3.3% year over year, comfortably above the Fed's target.
Under normal circumstances, that kind of backdrop would be a headwind for gold, not a tailwind. Goldman Sachs believes the answer is simple: relentless central bank buying is more than offsetting the pressure from a hawkish Fed and easing tensions in the Middle East. Citi is a bit more restrained. Its analysts expect gold to trade sideways—or even pull back slightly—in the near term before resuming its climb toward $4,500 by the fourth quarter.
Even with Gold's current celebratory status Silver ended up stealing the spotlight. It climbed 1.86% to $59.15 an ounce during Tuesday's session, outperforming gold and delivering the stronger move of the two precious metals.
Bitcoin, meanwhile, seems unconvinced by the broader market narrative. Even as gold strengthens and US stocks continue setting fresh record highs, BTC has spent most of the week stuck around $64,000. The disconnect has left traders searching for answers, suggesting that safe-haven demand and risk appetite are being driven by very different forces at the moment.