BATOOL GHAITH (ABU DHABI)
As Bitcoin stumbles, losing nearly 20% over the past three months, gold rallies to historic levels, powered by falling bond yields, a weaker dollar, and demand from central banks.
As the US Federal Reserve held its benchmark interest rate steady at 3.50%-3.75% in its first policy meeting of 2026, the decision had immediate implications for global financial markets and precious metals.
Gold prices soared to new record highs, trading above $5,300 per ounce shortly after the Fed announcement.
Over the month of January, gold prices had risen by nearly 18%. On January 27, gold was trading approximately around $5,280 per ounce, while on January 29, it is trading approximately over $5,530, which represents a significant jump compared with trading levels before the Fed decision.
On the other hand, Bitcoin has been behaving very differently from gold. In a statement sent to Aletihad, eToro stated that President Donald Trump’s return to the White House initially coincided with Bitcoin pushing to new record highs.
However, the early optimism has faded.
“Bitcoin is behaving less like a political trade and more like a high-liquidity risk asset, responding primarily to dollar liquidity, interest-rate expectations and broader risk sentiment,” Sam North, Market Analyst at eToro, said.
With gold absorbing much of the safe-haven demand and equities continuing to attract growth capital, there has been little urgency to rotate meaningfully into Bitcoin, even against a friendlier regulatory backdrop, he explained.
“Gold and silver have delivered stellar performance over the past 12 months, attracting strong investor flows and generating Bitcoin-like returns that have left bitcoin trailing,” North added.
He pointed out that markets cannot rely on political headlines alone to drive prices higher, “Bitcoin’s long-term case remains intact, supported by structural demand and institutional participation, but in the current environment, price action is being driven by liquidity and risk appetite, not politics.”
Ryan Lemand, Co-Founder of Neovision Wealth, said that central banks are not replacing the dollar with another fiat currency, they are diversifying into gold as balance sheet insurance.
“When gold starts outperforming stocks and bonds on a sustained basis, it usually signals a broader repricing of real assets, because it reflects stress in the monetary and financial layer,” Lemand told Aletihad.
Gold is no longer behaving like a hedge, it is more like a reserve asset being repriced, he added.
According to Lemand, China has been steadily reducing its holdings of US Treasuries while simultaneously accumulating gold to record levels, “treasuries are liquid, but politically encumbered. Gold is inert, but sanction‑proof”, he said.
Lemand also noted that gold rallies now look different from past cycles, as it is less about fear and more about strategy.
“When reserve managers start treating gold as monetary insurance rather than an alternative asset, price becomes secondary to availability, when that happens, gold prices reset,” he explained.
Analysts point out that while gold’s gains have been dramatic, they are grounded in broader market dynamics. The metal has now climbed through several technical thresholds and remains supported by structural demand from central banks, institutional investors, and global buyers.