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As GDPs Fall, Gold Price Makes a New Yearly High. Will Bitcoin Follow?

Gold prices made a new yearly high yesterday. While the difference from the February highs is mere $4, $1751 compared to $1747, it is following a wide and deep trough caused by the massive COVID-19 dump. Since the ominous address made by the U.S. Fed Chairman, Jerome Powell, on Wednesday, gold has risen by 3.45%. Moreover, silver also recorded massive gains with a 8.51% increase since the address.

GOLD/USD Daily Chart (TradingView)IMF Projects a World-wide Decline in GDP

The investors seem to be flocking to gold as the GPD projection for most countries are falling. The IMF projects a massive decline in global outputs, down below the levels of the 2008-09 recession. Emerging countries are likely to take negative 6% hit, while the average decline in global output is estimated to be around 3%.

IMF Projection of Annual Percentage Change in GDP (Source)

The strained US-China relationship is also adding the buying stimulus for gold. Nevertheless, if the expansion in the monetary were to continue, Central Banks around the world might get motivated to sell their gold reserves with money printing and interest rate already at new lows.

Bitcoin [BTC] has also been in an uptrend since the sell-off in March. While a lot of it has to do with the greed and excitement around Bitcoin Halving, the economic back-drop is leading Bitcoin’s cause, at the moment.

Furthermore, the decline in the stock markets and its’ decoupling with Bitcoin is also favoring it’s non-correlation with the markets. The S&P index is down 3% since Wednesday; currently, trading at $2859.

S&P 500 Index Daily Chart (TradingView)Will the Uptrend in Bitcoin continue?

Bitcoin bulls seems to be battling the sell-off and bearish rhetoric in the aftermath of halving. The hash-rate has declined to the COVID-19 levels as the old generation of miners are one the verge of extinction. Hence, the sell pressures from the miners is likely to reduce as well.

The price has been in a uptrend since March, and it currently finding support from the mid-line of the ascending bullish channel.

XBT/USD 1-Day Chart on Kraken (TradingView)

The price of Bitcoin at 4: 45 hours UTC on 16th May 2020 is $9540.

How do you think the price of gold and Bitcoin will react to the economic pressures? Please share your views with us.

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As GDPs Fall, Gold Price Makes a New Yearly High. Will Bitcoin Follow?

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Gold prices made a new yearly high yesterday. While the difference from the February highs is mere $4, $1751 compared to $1747, it following a wide and deep trough caused by the massive COVID-19 dump.

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Nivesh Rustgi

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CoinGape

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Coingape is committed to following the highest standards of journalism, and therefore, it abides by a strict editorial policy. While CoinGape takes all the measures to ensure that the facts presented in its news articles are accurate.

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The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.

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