Gold outpaces Bitcoin 9.3% as dollar hits three-month low

Gold gained 9.3 percent in the past month while Bitcoin slipped 0.8 percent, as the dollar fell to a three-month low on softer US economic data. The divergence, spanning mid-July to mid-August, has widened the gap between two assets investors often treat as hedges against the greenback.

"The dollar continues to trade heavily after the series of softer-than-expected data since the loss of US jobs in July," Marc Chandler, a currency strategist who has covered global markets for four decades, said. "In the current environment, changes in the short-term US rates appear to be the key to the greenback's broad performance."

The dollar tested JPY158.60 against the yen at mid-week before recovering to close above JPY159.25, Chandler noted. After disappointing second-quarter US GDP, the odds of a September rate hike slipped, while the greenback traded in a JPY158.85-159.40 range. Sterling advanced to $1.3570, with resistance near $1.3600 expected to cap gains into a heavy week of UK data.

The shifting rate outlook is the crux. If the Federal Reserve cuts rates as markets now expect, that could ultimately provide liquidity tailwinds for risk assets including Bitcoin, even as investors rotate toward gold as a perceived safer haven in the interim. The widening performance gap may steer capital flows within the crypto market.

A Dollar in Retreat

The dollar's slide follows a run of soft data — the July jobs report, stabilizing price pressures and a decline in retail sales — that has reshaped expectations for the Fed's next move. Chandler noted the dollar's momentum indicators are oversold, suggesting the recent losses may be nearing an exhaustion point after the weekend's test of the yen low.

What the Divergence Means for Crypto

For Bitcoin, the near-term picture is one of underperformance relative to gold, a dynamic that could persist while investors favor perceived safety. But the macro backdrop cuts both ways: a Fed easing cycle would typically support risk assets, and a weaker dollar historically lifts Bitcoin's appeal as an alternative to the greenback. The question is timing — whether rate cuts arrive before the rotation out of risk assets deepens.

This article is for informational purposes only and does not constitute investment advice.