Gold’s record-breaking run got a reprieve this week, snapping an eight-week winning streak as traders booked profits ahead of the Federal Reserve’s October policy decision.
The pullback has dampened demand for safe-haven assets and, for the first time in weeks, drawn some attention toward riskier assets, including Bitcoin. ,
Spot gold fell more than 6% from its all-time high of $4,380/ounce on Monday to near $4,120 by the weekend. The decline was caused by profit-taking, massive exchange-traded fund (ETF) outflows and a change in attitudes towards US-China trade relations.
Officials from both countries said they had reached “initial consensus” on key trade issues, easing fears of a new tariff cycle that had fueled the metal’s climb.
“The threat of 100% tariffs on Chinese goods is effectively off the table,” U.S. Treasury Secretary Scott Besant said Sunday, after two days of talks in Malaysia set the stage for a comprehensive agreement between President Trump and President Xi Jinping.
The soft macro backdrop, along with expectations that the Fed will cut rates by 25 basis points this week, took the shine off gold’s parabolic rally. Silver and platinum also fell sharply in signs of a reset ahead of Wednesday’s decision.
But this timing may prove fortuitous for BTC.
After lagging gold for most of the quarter, Bitcoin has gained more than 5% over the past week, reclaiming the $113,500 level and breaking free from a narrow, month-long range.
The move comes as the BTC/gold ratio – a measure of Bitcoin’s relative value against the yellow metal – is at its most oversold reading since nearly three years ago, according to CoinDesk analyst Omkar Godbole.
The ratio’s 14-day relative strength index (RSI) fell to 22.20 last week, down from the February low and the weakest since November 2022. Historically, such extremes in the BTC/Gold ratio have coincided with local lows for Bitcoin, often followed by periods of outperformance as traders flock back to higher-beta assets after macro fears subside.