Safe-haven assets are on a frenzy: gold and silver hit record highs, why is Bitcoin stuck in place and struggling to break 90,000?

Under the dual influence of escalating geopolitical tensions and a weakening US dollar, spot gold surged this week, breaking through $4,530 per ounce, while silver soared over 4%, surpassing the $75 mark, both hitting record highs. Meanwhile, Bitcoin remained below $89,000 amid light holiday trading, failing to break the critical resistance at $90,000. This stark contrast reveals the complex macro market landscape: traditional safe-haven assets are absorbing surging capital driven by geopolitical risks and rate cut expectations, while the cryptocurrency market has temporarily lost direction amid seasonal liquidity contraction. The divergence between “traditional” and “digital” safe-haven assets provides a vivid case for investors to understand cross-market capital flows.

Gold and Silver Storm: Geopolitical Tensions and Weak Dollar Trigger Historic Rally

This week, global financial markets witnessed a historic moment: a complete frenzy in the precious metals sector. Spot gold prices temporarily surged 1.2%, breaking through $4,530 per ounce and pushing the all-time high to a new level. At the same time, spot silver’s rally was even more aggressive, rising for the fifth consecutive trading day with a single-day increase of 4.6%, surpassing $75 per ounce for the first time. Platinum also climbed to its highest level since records began in 1987. This storm sweeping through the precious metals market is not caused by a single factor but results from a confluence of macro forces triggering a fierce chemical reaction.

The most immediate catalyst stems from escalating geopolitical tensions. The US sanctions on Venezuelan oil tankers and increased pressure on the Maduro government heightened concerns over global energy supply and regional stability. Simultaneously, anti-terror operations in Nigeria sent uncertainty signals to markets. Under the shadow of geopolitical conflicts, gold’s role as the ultimate safe-haven asset was sharply amplified, prompting global capital to flock for refuge. On the other hand, the Bloomberg US Dollar Spot Index fell 0.8% this week, the largest weekly decline since June. A weaker dollar makes dollar-denominated gold and silver cheaper for holders of other currencies, stimulating global demand and providing strong price support.

This historic rally is backed by solid capital fundamentals. Central banks worldwide continue to increase their gold reserves, providing long-term and stable buying support. Data shows that the largest gold ETF, SPDR Gold Trust, increased holdings by over 20% this year, indicating both institutional and retail investors are increasing allocations through accessible financial products. Deeper still, the market is trading on the logic of “currency devaluation.” Against the backdrop of expanding government debt, confidence in sovereign bonds and their underlying currencies is waning, prompting investors to seek physical assets like gold that do not rely on any government’s credit. This shift from fiat to hard assets forms the deep narrative of this bull market.

Key Drivers Behind Silver’s Surge

• Price Performance: Up over 150% this year, reaching a historic high above $75 per ounce this week.
• Supply-Demand Gap: Industrial demand (solar panels, electric vehicles, data centers) surges, while mine supply growth remains sluggish, leading to structural shortages.
• Financial Attributes: After a historic short squeeze in October, London vaults continue to attract funds, with speculative buying active.
• Policy Risks: US Department of Commerce’s national security review of critical mineral imports may trigger trade restrictions, exacerbating supply tightness expectations.
• Safe-Haven Demand: During rising geopolitical risks, silver moves in tandem with gold, attracting safe-haven capital.

Macro Under Currents: Asset Revaluation Under Rate Cut Expectations and Debt Concerns

Beyond the “black swan” of geopolitical risks and cyclical dollar weakness, a more persistent and profound macro undercurrent is reshaping the valuation system of global assets, with precious metals undoubtedly among the biggest beneficiaries. The Fed’s three consecutive rate cuts this year, along with market expectations of further easing by 2026, have fundamentally altered the attractiveness equation for zero-yield assets like gold and silver. When real interest rates (nominal rate minus inflation expectations) decline or turn negative, the opportunity cost of holding non-yielding gold diminishes significantly, while its hedging and appreciation potential is highlighted. Traders are betting on a long-term future of low rates with real money.

Meanwhile, deep-rooted concerns over global debt issues form the foundation of the long-term bull market in precious metals. Continuous expansion of fiscal deficits and central bank balance sheets to combat economic challenges have raised doubts about the long-term purchasing power of fiat currencies. This “debt monetization” worry drives “smart money” including sovereign wealth funds and large insurers to steadily incorporate gold into their strategic assets. It’s not just short-term hedging but a long-term hedge against systemic financial risks. Gold, as a non-liability asset unaffected by any single government’s policies, is being rediscovered and repriced in this era of high debt.

The influence of this macro undercurrent is so broad that it even suppresses the momentum of crypto markets, which are often linked to risk assets. When investors focus on hedging currency devaluation and sovereign credit risks, they seem more inclined to allocate funds into tangible “hard assets” rather than nascent, volatile digital assets. This explains why, despite similar rate cut expectations and geopolitical risks, Bitcoin’s recent performance remains subdued. The market’s choice indicates that, at this stage, the safe-haven preference within traditional finance still favors time-tested assets like gold and silver.

However, this is not a zero-sum game. From a longer-term perspective, Bitcoin and gold can serve different but overlapping investor needs. Gold remains the classic, stable “safe harbor,” while Bitcoin represents a forward-looking, asymmetric bet with growth potential. A mature macro-strategy portfolio could include both. The recent surge in gold and silver may be educating broader markets on the importance of safe-haven assets, a realization that could ultimately benefit all alternative stores of value, including Bitcoin. The current divergence may just be a brief episode within a long-term convergence trend.

Market Outlook: After the Divergence, How Will Assets Reprice?

At the year-end crossroads, investors are most concerned about how this macro trade led by precious metals will influence the market landscape at the close of 2024 and the start of 2025. First, whether the strength of gold and silver persists in the short term will heavily depend on the progress of geopolitical events and the next move of the US dollar index. If tensions ease or the dollar experiences a technical rebound, metals may see profit-taking. But in the medium to long term, central bank gold buying, de-dollarization of reserves, and concerns over debt monetization form a solid bottom for gold prices, and any significant correction could attract long-term allocations.

For the crypto market, the holiday lull is about to end. As traders return in January and with the usual new-year capital deployment, liquidity will quickly recover. Whether Bitcoin can leverage potential catalysts like approval of spot Ethereum ETFs or new institutional adoption news to break above $90,000 and start a new rally will be key to testing its resilience. Despite recent flat performance, Bitcoin’s annual gains remain impressive, and its long-term correlation with risk assets like tech stocks will determine whether it can decouple and form an independent trend amid future market turbulence.

For retail investors, the current environment offers several strategic considerations: first, diversification is more important than ever, covering traditional safe assets, digital assets, and other alternatives; second, understanding the driving logic behind different assets (geopolitics, interest rates, liquidity) helps grasp rotation opportunities; third, during liquidity-sparse holiday periods, beware of amplified volatility and avoid aggressive short-term trades. The global markets are seeking balance in a complex new normal, and the race between gold, silver, and Bitcoin has only just begun to unfold an intriguing chapter.