5 min readGold has rallied 33% so far this year, rising to a record high of $3578 this week. The yellow metal has outperformed the Nasdaq threefold and has nearly doubled Bitcoin’s gains across the year, which stand at 12%.
The precious metal has attracted safe-haven flows amid concerns over higher inflation from Trump’s trade tariffs, weaker labour market data, and rising long-term bond yields in Western economies. Elevated long-term bond yields reflect concerns over high government spending, low fiscal restraint, and unsustainable debt levels. This backdrop reinforces Gold’s historic role as a store of value. Central bank buying and USD weakness have also added to Gold demand. JP Morgan projects an average price of $3675 by Q2 2025 and a high of $4000 by the end of 2026.
Meanwhile, Bitcoin, which often trades as a risk asset in the near term but is viewed as a store of value in the long term, rose to a record high of $124.4k in July and is currently consolidating above 110k. Standard Chartered projections have put BTC as reaching $135k by the end of the quarter and 200k by the end of the year. While both assets are showing strength, the dynamics between them are changing, particularly as institutional interest in crypto accelerates.
Institutional demand
Bitcoin prices have been supported by institutional demand. Just this week, BTC ETFs recorded inflows of $301.3 million on Wednesday, adding to $332.7 million on Tuesday. Ongoing institutional demand and persistent ETF support the BTC price.
Bitcoin ETFs now have almost $10 billion in AUM, which equates to around 7% of the total 21 million BTC supply. BTC ETFs are almost catching up with Gold ETFs, which have $180 billion in AUM. This is impressive given the short time that Bitcoin ETFs have been in existence.
Highlighting the growing institutional demand, US BankCorp, the fifth-largest US bank, has decided to restart its Bitcoin custody service after a three-and-a-half-year pause. The bank’s Bitcoin custody programme, initially announced in 2021, is designed for institutional investment managers with registered or private funds, and for the first time, Bitcoin ETFs. Growing participation from traditional finance will likely add liquidity and legitimacy, supporting the BTC price over the longer term.
Bitcoin Gold ratio
The Bitcoin Gold ratio, a key, has lowered significantly. At the end of 2024, this ratio stood at 40 ounces of gold per Bitcoin, but by the third quarter of this year, fallen to 31.2 ounces to buy 1 BTC.
BTC/XAU trades within an ascending triangle, a bullish continuation pattern dating back to 2017. Should the pattern continue, this could point to a breakout in Q4 or early next year.
It’s worth noting that the peak in late 2024 is similar to the peak seen in 2021, which was also followed by a drawback before resurging. The current pullback is not as deep, suggesting strength and keeping the longer-term bull trend intact.
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