Gold, Bitcoin set new records amid expectations over decreasing interest rates

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The prices of both gold and Bitcoin have reached all-time highs in the Korean market, with market participants' increased anticipation over interest rate cuts by the U.S. Federal Reserve in June.

According to the Korea Exchange (KRX) Gold Market, the price of one gram of gold ended at 89,110 won ($66.78) at Monday's closing, a 2.2 percent increase from the previous trading session. The closing price set a record high not surpassed in the 10 years since the national bourse operator's gold market began operating in 2014.

The bullish trend of the precious metal is also observed overseas. London's gold price benchmark hit an all-time high of $2,083.15 per troy ounce on Monday, rewriting the previous record of $2,078.40 set at the end of last year.

Market experts point out that the price of the safe-haven metal is closely linked to interest rates, as lower interest rates imply a weakening dollar, which in turn increases the investment appeal of the precious metal. With more investors, both in and outside of Korea, positively evaluating the chances of a rate cut in June, the value of gold is on an upswing trend.

"The recent upturn of gold indicates that the time is coming closer for the Fed to end its interest rate hike cycle. This implies a favorable direction for gold's future prices, which has an inverse correlation with real interest rates," said Choi Jin-young, a researcher at Daishin Securities, forecasting that the upper limit of gold prices in the second half of this year could reach $2,150 per troy ounce.

Another economist, Chun Kyu-yeon from Hana Securities, points out that increased geopolitical tensions in the Middle East have also played a part in the increased preference for safe assets.

The price of Bitcoin is displayed at the customer center of Bithumb in Seoul, Tuesday, as it continues to hit record highs day after day. Yonhap

Meanwhile, bitcoin has also been enjoying bullish moves, continuing to replace its previous all-time highs in the Korean market.

At coin exchanges in Korea, including Upbit and Bithumb, Bitcoin prices hit 97 million won earlier on Tuesday, marking a new all-time high.

Since the price of the cryptocurrency set a new record high on Feb. 28, exceeding the previous record of 82 million won set in November 2021, it has successfully continued its bullish gains.

The strength of Bitcoin is attributed to the combination effect of the influx of significant institutional funds following the approval of Bitcoin ETFs as well as the anticipation over the upcoming halving of mining rewards, which occurs every four years, leading to a reduction in the supply of new Bitcoins.