Gold Hits Record High as Bitcoin Stumbles Amid Trade Tensions

Gold has staged a remarkable performance in 2024, climbing to an unprecedented $4,376 per ounce on October 17 according to TradingView data. This surge has propelled the yellow metal’s market capitalization above $30 trillion, making it roughly 14 times larger than Bitcoin’s current $2.1 trillion valuation. The scale of gold’s dominance becomes even more apparent when compared to traditional tech giants – gold now exceeds the combined value of all seven of the world’s biggest technology companies, including Apple, Microsoft, and Nvidia.

Year-to-date performance figures reveal the staggering nature of gold’s ascent. The precious metal has gained an astonishing 60%, easily outpacing both the S&P 500’s 14% return and Bitcoin’s 17% climb. This performance gap underscores gold’s resurgence as the preferred hedge during periods of economic uncertainty and geopolitical stress.

The institutional shift toward gold is further evidenced by CryptoRank data showing that inflows into gold have exceeded Bitcoin’s by over $15 trillion since January 2024. This massive capital movement reflects a fundamental reassessment of traditional safe-haven assets among institutional investors seeking protection from currency and policy risks.

The immediate catalyst for gold’s latest surge appears to be renewed trade tensions following US President Donald Trump’s announcement of planned tariffs on China. This move jolted global markets and revived demand for traditional hedges, with gold becoming the go-to asset for investors seeking shelter. The timing highlights how geopolitical developments between the United States and China continue to shape global capital flows and asset preferences.

Jurrien Timmer, director of global macro at Fidelity, provides crucial context for this trend: “Gold is in demand as countries strive to diversify themselves from the US reserve currency hegemony. We can see that the share of reserve assets held in gold has been steadily increasing and is now as big as reserves held in euros. Hard money is taking share from fiat money, and the dollar is losing market share against gold.” This analysis points to a broader structural shift away from dollar dominance rather than merely a temporary flight to safety.

The digital transformation of gold ownership has accelerated alongside its price appreciation. According to Token Terminal data, tokenized gold products on Ethereum have climbed more than 100% year-to-date to exceed $2.4 billion. Tether Gold (XAUT) exemplifies this trend, with its market cap more than doubling this year from $650 million to $1.6 billion, demonstrating how traditional and digital asset markets are converging in their embrace of gold’s safe-haven properties.

While gold celebrates record highs, Bitcoin faces significant headwinds. According to CryptoSlate data, BTC price has fallen more than 4% in the past 24 hours, briefly touching its lowest level since June at $103,300 before recovering to $106,051. This performance marks a 16% decline from the digital asset’s all-time high of $126,173, creating a stark contrast with gold’s simultaneous ascent.

Bitget Wallet CMO James Elkaleh characterizes the market pullback as reflecting “short-term panic, not structural weakness.” He describes the dip as “early panic-induced selling” triggered by tariff-related shocks, which has pushed market sentiment sharply back into “Fear” territory according to Coinperps data. This matches sentiment levels last seen in April when Bitcoin traded below $80,000, indicating how quickly market psychology can shift in response to geopolitical developments.

Elkaleh offers a nuanced perspective on Bitcoin’s behavior during market shocks: “Bitcoin remains a hybrid asset. In the early phase of macro shocks, it trades like risk-on tech equity, selling off alongside other high-beta assets. Yet as liquidity conditions improve and confidence in traditional markets weakens, it often shifts into a safe-haven role — benefiting from its fixed supply, global accessibility, and separation from state-issued money.” This dual nature explains Bitcoin’s current struggle while suggesting its fundamental value proposition as a non-sovereign hedge remains intact.

The current divergence between gold and Bitcoin performance raises fundamental questions about what constitutes a reliable hedge in today’s complex financial landscape. Gold’s 60% year-to-date gain and $30 trillion market capitalization demonstrate its enduring appeal among institutional investors and central banks seeking protection from policy excess and currency debasement. The metal’s performance during the recent US-China trade tensions reinforces its traditional role as a geopolitical safe haven.

Meanwhile, Bitcoin’s 16% decline from its peak illustrates the challenges facing newer digital assets in establishing consistent safe-haven credentials. While analysts like Elkaleh argue that Bitcoin’s core value proposition as a non-sovereign hedge against policy risk remains valid, its current correlation with risk assets during initial shock phases complicates this narrative. The asset’s fixed supply and global accessibility provide theoretical hedging benefits, but market behavior during crises continues to evolve.

The growth of tokenized gold products on Ethereum, particularly Tether Gold’s market cap surge from $650 million to $1.6 billion, suggests investors may be seeking the best of both worlds – gold’s proven hedging characteristics combined with blockchain’s efficiency and accessibility. As geopolitical tensions persist and trade disputes intensify, the competition between traditional and digital safe havens will likely continue to redefine how investors protect wealth in an increasingly uncertain global economy.