Gold-to-Bitcoin ratio nears $4,400 turning point as CPI looms

Gold trades near $4,400 as safe-haven demand outpaces Bitcoin ahead of Wednesday's US CPI, pushing the gold-to-Bitcoin ratio toward a technical turning point.

"Precious metals maintain a bid, with gold holding gains and maintaining CTA length north of $4,400 per ounce even as oil prices and rates continue to churn higher," TD Securities analysts said.

Spot gold reached $4,434.84 per ounce on Tuesday, its highest since June 5, before easing to $4,374.82 at 5:48 a.m. GMT, Reuters reported. The 14-period RSI sits near 72, above the overbought threshold of 70, while the dollar index holds below its 50-day exponential moving average around 100.32. Bitcoin, by contrast, has been trapped between $60,000 and $80,000 for six consecutive months, according to K33, with total crypto market capitalization at $2.25 trillion and bitcoin dominance at 56.37 percent.

A softer-than-expected core CPI reading, forecast to rise 2.5 percent year over year in July, could reinforce expectations the Fed will avoid further tightening, weighing on the dollar and supporting gold and risk assets. A hotter print would revive rate-hike bets, with the CME FedWatch tool pricing more than a 75 percent probability of a hike before year-end.

The Ratio's Technical Crossroads

The gold-to-Bitcoin ratio has climbed as bullion's recovery outpaced a listless bitcoin market. Gold's 200-day simple moving average at $4,500.55 looms as the next major resistance, with a sustained break above $4,485 opening the door to $4,500-$4,540, according to the World Gold Council's midyear outlook. On the downside, the 100-day SMA at $4,388.33 provides immediate support, followed by the 38.2 percent Fibonacci retracement at $4,298.48.

What the CPI Means for Both Assets

The July report, due at 8:30 a.m. ET, follows a June print that showed headline CPI falling 0.4 percent month over month while core inflation was unchanged. Core CPI is expected to rise 0.2 percent month over month in July, slowing from a 2.6 percent annual pace to 2.5 percent. The Fed voted 9-3 to hold its benchmark rate at 3.5 percent-3.75 percent on July 29, with three officials preferring a quarter-point increase.

A benign core reading would likely push September rate-hike odds, currently at a coin-toss, lower and could draw flows into both gold and bitcoin as the dollar weakens. A hotter print would strengthen the dollar and Treasury yields, pressuring non-yielding assets. Geopolitical risk from stalled US-Iran negotiations over the Strait of Hormuz and rising oil prices keeps a floor under gold's safe-haven bid, TD Securities noted, even as a stronger-than-expected inflation print may be needed to shake the current narrative.

For bitcoin, the ratio's turning point carries outsized significance. A decisive break in gold's favor would reinforce the preference for bullion as an inflation hedge, while a reversal could signal capital rotating back into crypto as rate-cut expectations firm. The outcome of Wednesday's CPI report, and the Fed's response at its next meeting, will determine which path the ratio takes.

This article is for informational purposes only and does not constitute investment advice.