The gold market experienced a significant surge on Wednesday, with prices climbing sharply by 6% to surpass $5,400 per ounce for the first time in history.
While silver and platinum recorded even higher percentage increases, gold remained the dominant asset due to its massive market value estimated around $40 trillion.
A large portion of this rally was triggered by remarks from Federal Reserve Chairman Jerome Powell during a press briefing after the central bank’s anticipated decision to keep the federal funds rate steady between 3.50% and 3.75%.
When questioned about the rapid rise in gold and silver prices, Powell advised caution against reading too much into these movements as indicators of broader economic trends. He stated, “Don’t read too deeply into this from a macroeconomic perspective,” adding that despite some claims suggesting the Fed is losing credibility, “that is simply not true.”
“If you examine inflation expectations closely, our credibility remains exactly where it should be,” Powell emphasized. Nevertheless, investors bullish on gold appeared unconvinced by his reassurances.
What about Bitcoin?
Meanwhile, supporters of Bitcoin continued observing from afar as physical gold once again significantly outperformed its digital rival. Bitcoin’s price fluctuated within an extremely narrow band throughout Wednesday before dipping slightly after the Fed announcement and settling near $89,000—essentially unchanged over 24 hours.
The other major cryptocurrencies mirrored this subdued trading pattern.
U.S. stock markets also showed minimal movement as traders awaited earnings reports from major companies such as Microsoft, Meta Platforms (formerly Facebook), and Tesla.
Is Bitcoin Losing Its Status As Digital Gold?
Despite favorable macroeconomic factors often cited to support bitcoin’s reputation as “digital gold”, including a weakening U.S. dollar and heightened geopolitical tensions, bitcoin has struggled recently while physical gold has surged more than 90% over the past year.
This divergence raises questions about bitcoin’s effectiveness as a hedge against global risks—especially since traditional assets it was meant to compete with are currently outperforming it—according to James Harris, CEO of yield platform Tesseract Group.
“We’re clearly witnessing a market environment where cryptocurrencies are lagging behind some of their intended competitors,” Harris explained in his analysis. “Part of this outperformance stems from shifts in geopolitical and fiscal risk pricing but also reflects how gold is reclaiming relative market share previously held by bitcoin.”