A weaker U.S. dollar and declining yields on U.S. long-term Treasury bonds drove gold and Bitcoin higher in tandem on Tuesday. Spot gold rose as high as $4,696.18 per ounce, the highest level since mid-May; Bitcoin climbed above $80,000 for the first time since mid-May, reaching $81,237 during intraday trading before giving up some of those gains.
The decline in the US dollar has driven an increase.
This rally occurred after the U.S. Treasury expanded its Treasury repurchase operations last week. Market perceptions of liquidity and fiscal prospects shifted, leading to declines in the dollar and long-term U.S. Treasury yields. The World Gold Council reported that, following the announcement, gold prices rose by approximately 3%.
Gold typically attracts safe-haven buying during periods of economic or geopolitical stress, while Bitcoin has increasingly been viewed by some investors in recent years as an alternative asset to fiat currency. Their simultaneous strength suggests that markets are rebalancing positions toward hard assets.
Gold ETFs turned net inflows in July
Driven by a rebound in prices, capital flows into gold investment products have also improved. According to data from the World Gold Council, global gold-backed ETFs recorded a net inflow of $3 billion in July, reversing two consecutive months of net outflows.
- Open interest increased by 23 metric tons to 4,068 metric tons.
- Assets under management increased to $530 billion.
- Europe and Asia lead in fund inflows
The institution noted that gold prices ended a four-month consecutive decline in July, rising approximately 2% for the month. Entering August, the end of the ceasefire between the United States and Iran, along with the U.S. expansion of treasury repurchase operations, further heightened market attention to geopolitical and fiscal developments.
The expectation of a September rate hike has clearly cooled.
The World Gold Council stated that the market has largely ruled out a Fed rate hike in September. Recent weaker economic data has eased concerns about further policy tightening, providing support for gold.
Nansen senior research analyst Jake Kennis told Decrypt that the simultaneous rise of bitcoin and gold during a weakening dollar aligns with the market’s hedging logic against currency depreciation and fiscal credibility pressures. However, he noted that this correlation is more of a market signal and not yet sufficient on its own to prove that investors have fully shifted away from U.S. Treasuries.