Gold, bitcoin hit records but stock markets fall

March 5, 2024 08:39 PM

Gold prices and bitcoin hit all-time highs Tuesday but stock markets were mostly lower as investors await fresh signals about the direction of interest rates.

Shortly after 1330 GMT, gold advanced to $2,141.79 per ounce, surpassing its prior peak of $2,135.39 that was struck in early December, before pulling back slightly.

Gold, whose twin drivers are jewellery and investment buying, has now gained about 15 percent in value since the same stage last year.

"Concerns surrounding global economic prospects, geopolitical tensions, and shifting expectations towards earlier interest rate cuts have fuelled increased demand for the precious metal, leading to its upward price trajectory," said ActivTrades analyst Ricardo Evangelista.

This week's strong advance was partly triggered by weak data published Friday showing that US manufacturing activity contracted in February more quickly than analysts expected.

That stoked market expectations that the Fed could move more quicky than expected to lower borrowing costs in order to stimulate economic activity.

Among digital assets, bitcoin hit a record high above $69,000, buoyed by the world's biggest cryptocurrency becoming more accessible for trading amid tight supplies.

Bitcoin reached $69,191.94, beating a record $68,991 struck in November 2021.

But Wall Street's main indexes all opened lower, with the tech-heavy Nasdaq down one percent, after closing in the red on Monday.

Tesla slumped three percent and had been down even further in pre-market trading after reporting disappointing sales in China and after its factory near Berlin was hit by an act of sabotage, halting production.

David Morrison, a senior market analyst at Trade Nation, said he doesn't think this week's clawback indicates a drastic change of direction for a market that is up almost 10 percent since the start of the year.

"There has been no significant pull-back since the rally began in late October, but there have been sharp steps higher followed by regular pauses," he said.

Wednesday, Federal Reserve Chair Jerome Powell will take questions from a House panel, with market participants paying close attention to gauge when the US central bank might start cutting rates.

Most analysts expect highly-anticipated Fed rate cuts to start later this year, as officials have voiced caution about trimming too soon while they await further inflation data.

"Markets are pricing in a very low likelihood of a rate cut in the next" Fed policy meeting later this month, said Chris Waterbury, a derivative manager at Charles Schwab.

"US economic announcements later this week should help outline if we can see this bullish rally continue."

The European Central Bank is expected to keep rates steady when it meets Thursday, and the US reports non-farm payrolls Friday.

In Europe, Paris, London and Frankfurt were all little changed in mid-afternoon trading.

German chemicals giant Bayer was down six percent after it revealed that it plunged deep into the red in 2023, weighed down by woes related to its glyphosate-based weedkillers.

On the eve of a key UK budget update, London won a slight boost from news that network testing firm Spirent Communications agreed to a £1-billion ($1.3-billion) takeover from US communications equipment maker Viavi. Spirent was up 62 percent.

Key figures around 1440 GMT

New York - Dow: DOWN 0.5 percent at 38,805.23 points

New York - S&P 500: DOWN 0.5 percent at 5,105.75

New York - Nasdaq Composite: DOWN 1.0 percent at 16,048.61

London - FTSE 100: UP LESS THAN 0.1 percent at 7,642.17

Paris - CAC 40: DOWN 0.2 percent at 7,939.73

Frankfurt - DAX: UP LESS THAN 0.1 percent at 17,723.68

EURO STOXX 50: DOWN 0.2 percent at 4,904.28

Tokyo - Nikkei 225: FLAT at 40,097.63 (close)

Hong Kong - Hang Seng Index: DOWN 2.6 percent at 16,162.64 (close)

Shanghai - Composite: UP 0.3 percent at 3,047.79 (close)

Euro/dollar: DOWN at $1.0848 from $1.0859 on Monday