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Gold prices rose to a three-month high Monday morning as investors have flocked to the safe-haven asset amid continued Federal Reserve stimulus that's weakened the dollar.
Spot gold rose 0.5% to $1,853.12 an ounce on Monday, reaching the highest point since February 10, according to Bloomberg. The price movement came as bitcoin sank to nearly $42,000 after Elon Musk suggested Tesla may sell its holdings.
The ratio of gold's price relative to bitcoin is up to the highest point since early February. One Bitcoin is now equivalent to about 23 ounces of gold bullion, down from a record of 36 ounces in April, according to Bloomberg data.
It's likely that many investors may be buying gold as an alternative to a weakening dollar. The Federal Reserve has promised to keep interest rates near zero for the foreseeable future, which could weaken the US currency and strengthen the case for gold.
Gold has also been historically viewed as a hedge against inflation, and Wall Street has grown increasingly concerned that inflation will overheat as the US emerges out of the pandemic.
Cryptocurrency bulls argue that bitcoin's fixed supply makes it an even better hedge against inflation than Gold, but recent price movements in both assets question this narrative.
Last week, when key inflation data came in significantly higher than expected, bitcoin fell 7% in one day, moving in the exact opposite direction as one would expect an inflation hedge to move. Bitcoin experts say they're not concerned about day-to-day movements in the historically volatile cryptocurrency's price.
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