Gold prices drop to 10-month low while bitcoin rally continues

Gold prices have skidded to a 10-month low while bitcoin, which is considered by some as a digital replacement for gold, has been on a bull run.

The price for a gram of gold declined for five trading days in a row on Thursday as it closed at 63,900 won ($57.67), down 0.48 percent from a day earlier, according to the Korea Exchange.

The closing price is the lowest since April 6 when the gold price came in at 63,780 won.

Compared to the record high of 80,100 won on July 28, the price has tumbled 20.22 percent.

Gold prices jumped sharply in the first half last year as concerns over the novel coronavirus grew. Throughout the second half, however, governments’ stimulus measures around the world pumped liquidity into the market and drove up demand for assets with high risks, like equities. Gold prices dropped in the same period, while recent moves by central banks to raise interest rates have also dragged the commodity‘s prices down.

“Preference for risky assets has improved on the hope of the economic recovery in line with the distribution of vaccines for COVID-19,” said Park Kwang-rae, an analyst at Shinhan Investment & Securities, adding that “a low chance of interest rates falling and various investment options, including bitcoin and corporate bonds, currently limit the rise of gold prices.”

Meanwhile, bitcoin surpassed an all-time high of $50,000 per bitcoin in value on Feb. 16. After quadrupling last year, the coin shot up by some 80 percent this year.

The cryptocurrency has received a great amount of interest from businesses in different industries, with companies like electric-car maker Tesla and Morgan Stanley investing or having plans to invest in the digital currency.

Some high-profile figures in the financial market, including Rick Rider, chief investment officer of investment firm BlackRock, even forecast that the digital currency could replace gold down the road.

By Kim Young-won (wone0102@heraldcorp.com)