Summary
- Gold futures have risen 10.5% year-to-date, significantly outperforming Bitcoin's 2.4% return.
- The rise in gold is attributed to increased preference for safe-haven assets due to global economic uncertainty and geopolitical risks.
- If U.S. interest rates decrease as expected, appetite for risk assets may revive.
Gold Futures Up 10.5% Year-to-Date
Bitcoin Shows 'Sluggish' Growth at 2.4%
As preference for safe-haven assets strengthens, gold is recording the highest returns among major investment assets. It has shown remarkable strength, more than doubling the returns of U.S. stocks and Bitcoin, which are classified as risk assets.
According to the New York Commodity Exchange (COMEX) on the 23rd, gold futures prices, which started trading at $2,666 per troy ounce this year, have risen 10.5% year-to-date. Gold has hit record highs ten times this year. Current gold prices are approaching $3,000.
The S&P 500 index, comprising 500 companies listed on U.S. exchanges, rose only 4.24% during the same period. This means gold's return was more than double that of the S&P 500. Only the KOSPI index, which has seen sharp gains this month, has returns (10.7% year-to-date) comparable to gold.
The return gap between Bitcoin and gold has widened even further. According to Upbit, a domestic cryptocurrency exchange, Bitcoin, which started trading at 142.32 million won at the beginning of the year, has remained range-bound this year. Bitcoin's year-to-date increase is just 2.4%. This is even lower than the won-dollar exchange rate increase (2.91%). While Bitcoin surged immediately after Donald Trump's U.S. presidential nomination, it has shown sluggish movement recently.
The surge in gold prices is attributed to expanded global economic uncertainty and geopolitical risks. This is due to growing uncertainty about the Federal Reserve's interest rate policy and inflation concerns. While peace talks between Russia and Ukraine are being discussed, analysts say it's too early to be optimistic. The Middle East situation also remains unstable.
If U.S. interest rates gradually decrease as expected, risk appetite may revive. Generally, interest rate cuts lead to increased preference for risk assets. Many experts also predict that gold has room for additional short-term gains.
Reporter Mihyun Cho mwise@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
