Weekly Report: Gold Breaks Below $4,500! Crude Oil Surges Past $110, But Bitcoin Rallies and Outperforms Gold

The Middle East situation continues to escalate, coupled with the Federal Reserve signaling a hawkish shift. Global financial markets experienced systemic shocks this week: gold plummeted over 10% in a single week, marking the worst weekly decline since 1983; Brent crude oil rebounded above $110, with Dubai crude oil futures hitting a record high; U.S. stocks declined for the fourth consecutive week, and global bond yields surged simultaneously. However, Bitcoin defied the trend, rebounding from support near $69,000 to $71,000, outperforming gold by 12 percentage points this week.
(Background: Bitcoin surged to $72,033, with short positions liquidated for $178 million; gold declined, revealing a “safe-haven rotation”)
(Additional context: Iran threatened to push oil prices above $200, attacking ships in the Hormuz Strait)

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• Three forces simultaneously crushing gold
• Bond market collapse, U.S. stocks entering fourth week of decline
• Bitcoin outperforms gold against the trend

Gold this week collapsed, dropping over 10% in a single week, with spot prices falling below $2,500 per ounce, marking the worst weekly decline since 1983. From its all-time high of $5,589 at the end of January, gold has fallen more than 18.5%, with a weekly low of $4,477.

Meanwhile, oil prices surged dramatically, with Brent crude returning above $110. Citigroup estimates the future price could reach $120; Dubai crude oil futures hit a record $157.66 per barrel, surpassing the 2008 high of $147.50. Since the escalation of Middle East conflicts, oil prices have increased by over 40%.

Three forces simultaneously crushing gold

This round of gold collapse is driven by three mutually reinforcing pressures.

First, the Federal Reserve has turned hawkish, with the latest interest rate projections indicating only one rate cut expected through 2026, far below market expectations.

Second, Middle East conflicts are boosting inflation expectations. Continued military actions by the U.S. and Israel against Iran, along with disruptions in the Strait of Hormuz affecting about one-fifth of global oil shipments, have caused oil prices to spike sharply, directly raising inflation expectations and further constraining the Fed’s room to cut rates.

Third, the dollar has strengthened. Repricing of interest rate expectations has driven the dollar index higher, exerting direct pressure on gold priced in USD. The confluence of these three forces has completely diminished gold’s “safe-haven” appeal this week.

Bond market collapse, U.S. stocks entering fourth week of decline

Not only gold, but the global bond markets are also under pressure. Yields on U.S., UK, and German bonds have hit multi-year highs, with signs of large-scale deleveraging. Bloomberg points out that the war and the resulting reduction in rate cut expectations are central to the rapid tightening of financial conditions.

U.S. stocks declined for the fourth consecutive week, marking the longest losing streak in a year. The Nasdaq dropped over 2% in a single day, with tech stocks broadly under pressure. Equities, bonds, and currencies all weakened simultaneously, indicating a market-wide repricing of risk assets.

Bitcoin outperforms gold against the trend

Amid the widespread decline of traditional safe-haven assets, Bitcoin has charted a markedly different course.

Bitcoin found strong support near $69,000 and then rebounded to $71,000, closing higher for five consecutive days. This week, Bitcoin outperformed gold for the third straight week, with a weekly outperformance of 12 percentage points.

Wintermute trader Bryan Tan noted that Bitcoin had already outperformed gold by about 20% at the onset of the Middle East conflict, indicating that capital is beginning to shift into cryptocurrencies as traditional safe havens lose their appeal.

Bitcoin spot ETFs also saw significant capital inflows, with net inflows reaching $700 million this week, one of the strongest weekly figures recently. The continued institutional participation is seen as a validation of Bitcoin’s narrative as “digital gold” amid current turbulence.

However, market analysts also caution that geopolitical uncertainties remain high, and risk asset re-pricing is not yet complete. Until the Federal Reserve’s policy path becomes clearer and the Middle East situation shows signs of cooling, volatility is likely to persist.