Gold prices plummeted by more than 5% – the sharpest one-day drop in over two months. Not only that, silver, platinum, and palladium also fell in price during a massive sell-off of precious metals on December 29th.
As metal prices recovered today, analysts offered conflicting opinions. Some believe the upward trend will continue, while others warn of a potential shift in capital towards cryptocurrency assets.
Precious metals and cryptocurrencies move in opposite directions when volatility increases sharply.
On December 29th, the precious metals market witnessed a sharp decline . Gold lost more than 5% of its value, recording its largest single-day drop since the end of October 2015.
Silver surged to a high of nearly $84 before quickly reversing course and closing around $70.50 . This represents a drop of 16%. Palladium also fell by a similar amount.
Ultimately, platinum also lost more than 15% of its value. These sharp declines followed a period of explosive growth, which helped the precious metal reach new highs this month.
"As we said last night, the upward momentum has become too hot. Prepare for even more volatility," The Kobeissi Letter Chia .
As precious metal prices plummeted, the cryptocurrency market rebounded, with Bitcoin briefly surpassing $90,000 and Ethereum rising to $3,000. This led some experts to believe that money flows were beginning to shift.
“Silver dropped 11% in just a few hours as the crypto market began to surge. Money is flowing out of silver and gold and into Bitcoin and the cryptocurrency market in general,” Crypto Rover commented .
However, the recovery in precious metals was short-lived. Today, precious metals continued to turn green, with gold rising nearly 1% in the last 24 hours.Silver surged by 3%, platinum increased by 2.6%, while palladium remained slightly lower.
While precious metals regained upward momentum, the cryptocurrency market experienced a slight decline. The total crypto market Capital decreased by 0.13% in the past 24 hours, showing mixed signals and leaving experts divided on the market's future trend.
The upward chain in gold prices reinforces the bullish outlook.
Many experts believe that the recent drop in precious metals does not necessarily mean a decrease in actual demand. The market still expects the price increase to potentially continue into next year .
"Such simultaneous declines usually indicate a Dump off in an oversupplied market, rather than a sudden shift in demand for the metal," said a professional investor.
In addition, the Kobeissi Letter also highlighted that gold has remained above its 200-day moving Medium for approximately 550 trading sessions. This is the second longest winning chain ever recorded.
The chain run occurred after the 2008 financial crisis, when gold remained above this level for approximately 750 sessions. During the chain run, the price of gold has risen by 135%, surpassing the 91% increase recorded from 2009 to 2011.
For comparison, the 1986-1988 cycle lasted approximately 510 sessions with a 38% increase, while the 1978-1980 period saw gold rise by 209% in just about 495 sessions.
"Gold's momentum remains stronger than ever," the article further noted.
Reasons why you should rotate your investment Capital .
Conversely, some argue that sharp corrections in gold prices often affect investor sentiment and can lead to a wave of portfolio shifts to other assets.
"While some expect gold to recover, current divergent signals suggest a deeper market shift is underway, which could support assets like BTC," Professor Crypto commented .
From a technical analysis perspective, expert Michaël van de Poppe points out that numerous bearish divergence signals have appeared across different timeframes, indicating that momentum has weakened despite gold having just reached a peak. He explains that,
“Gold has corrected significantly… While people don’t think this is a long-term correction, the price falling below its previous peak is clearly not good. This is probably the phase where many still believe the price will continue to rise, and then this same group will criticize Bitcoin for not increasing. This is when the money flow will shift.”
In another post, Van de Poppe noted a bullish divergence on the daily BTC/gold chart, suggesting that Bitcoin is likely to outperform gold in the near future.
“Periods with strong bullish divergence like this include: Q3 2024 (just before Bitcoin broke the $100,000 resistance level), Q4 2022 (the end of Bitcoin's bear market). A major money flow shift is about to occur,” he emphasized.
The difference between BTC/GOLD. Source: X/CryptoMichNLThe volatility in precious metals and crypto markets indicates increasing volatility and growing concerns about Capital flows. While the long-term trend for gold remains strong, technical signals and relative performance suggest investors are increasingly considering alternative assets.
Whether the recent developments represent merely a temporary separation or the initial sign of a larger wave of shifts remains an open question.
