Gold prices maintained their position above the $2,820 threshold, having recently hit a record high as investors turned to the precious metal for stability in the face of increased volatility in bitcoin and global equity markets.
The climb in gold’s value has been driven by a spike in demand following China’s announcement of retaliatory tariffs on U.S. goods. Market participants are now anticipating key U.S. employment data expected later this week.
Bitcoin has seen significant fluctuations, currently trading above $99,000, which marks a rebound from a recent low of $92,000 following Monday’s sell-offs. However, the cryptocurrency is still trading at more than 9% below its highest value of $108,000, set on January 20, 2025. U.S. stock futures are also showing signs of investor hesitancy, with Dow Futures, S&P 500 Futures, and Nasdaq Futures all indicating slight declines.
Analysts have pointed to gold’s traditional role as a safe-haven asset during periods of market turmoil. Bitfinex analysts told The Block that "Investor flight to gold during times of volatility is well-documented," adding that while bitcoin is sometimes called ’digital gold,’ it does not yet match gold’s reputation for providing stability due to its higher volatility and relatively short history in financial markets.
Agne Linge, WeFi Head of Growth, suggested that the proposed tariffs by the Trump administration could lead to inflation and higher costs for certain goods, potentially undermining stock market growth and prompting investors to turn to gold as a short-term safe haven.
The market’s uncertainty is further evidenced by volatility indices. Bitcoin’s 24-hour realized volatility has seen a substantial increase, as shown by the BITMEX BVOL24H Index. Similarly, the Cboe Volatility Index (VIX), which predicts stock market volatility, rose from 16.43 on January 31 to 18.62 on February 3, 2025.
Equity and cryptocurrency markets have continued to experience turbulence, with bitcoin briefly surpassing $100,000 following the announcement of a one-month postponement to U.S. tariffs on Mexico and Canada. However, the uplift was temporary as China introduced retaliatory tariffs, causing further market fluctuations and pushing bitcoin’s price down to $98,000.
In response to U.S. tariff threats, China’s Ministry of Finance declared a range of economic sanctions against the U.S., including new duties on imports such as coal, liquefied natural gas, crude oil, agricultural machinery, and certain vehicles, set to take effect on February 10.
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