Gold Is Destroying Bitcoin in the Battle of the Safe Havens

Investors are once again flocking to traditional safe havens, as the price of gold shot up more than 2% Sunday following the release of shocking Chinese economic data over the weekend. Meanwhile, futures on the Dow and broader U.S. stock market plunged anew over fears that the rapidly spreading coronavirus could drag the global economy into recession.

The price of gold was in a steep recovery on Sunday, gaining as much as 2.5% to $1,605.50 a troy ounce. On Friday, gold plunged by as much as 4.7%, its worst showing since 2013. The circumstances behind the crash are a little murky, though margin calls amid the wider market slump were partially to blame.

Prior to the selloff on Friday, gold had been rallying for weeks over the spread of coronavirus. This culminated in multiple seven-year highs for the precious commodity. At its highest point last week, gold hit $1,691.70 an ounce in New York trading. Silver futures, which experienced an even bigger selloff on Friday, were up 40 cents, or 2.5%, to $16.86 a troy ounce Sunday evening.

Investors were on high alert Sunday evening after the latest data out of China showed deepening cracks in the economy due to coronavirus. China’s official manufacturing purchasing managers’ index (PMI) crashed to a record low of 35.7 in February from 50.0 the month before. On the PMI scale, anything below 50 signifies contraction in economic activity. The gauge of services activity plunged to 29.6 from 54.1 in January.

Crypto enthusiasts trying to sell bitcoin as a global reserve asset have been kicked in the gut over the past few weeks. Not only has bitcoin failed to rally alongside traditional safe havens like gold and government bonds, the number one cryptocurrency has actually lost a step. Bitcoin’s price is down over 17% from the Feb. 12 high near $10,500. It’s now sitting below the 200-day moving average, a pivotal long-term support.

Gold Is Destroying Bitcoin in the Battle of the Safe Havens, CCN, Mar 02