Gold vs Bitcoin: Under the Fed's Policy Shift Expectations, Who Is the Real Winner of the 'Rate-Cut Trade'?

Federal Reserve Chair Kevin Warsh's remarks at the European Central Bank's annual forum in Sintra, Portugal, became the core variable for global asset pricing on July 2. Warsh clearly announced that the Fed will no longer provide forward guidance on interest rates, instead relying entirely on the latest economic data for meeting-by-meeting decisions. He also stated that inflation expectations and upside risks to inflation have both declined in recent weeks.

This statement directly triggered a decline in U.S. Treasury yields. Data showed that the benchmark 10-year U.S. Treasury yield closed at 4.458%, while the policy-sensitive 2-year yield settled at 4.183%. The narrowing of U.S. Treasury yields reduced the opportunity cost of holding gold, a non-yielding asset, providing direct support for gold prices.

Spot gold rose during trading on July 2, gaining 0.8% on the day to $4,064 per ounce. The previous day, gold had touched $4,114.99, a new high since June 23. The U.S. June ADP employment data came in below expectations—adding 98k jobs versus the market forecast of 118k—further reinforcing market views of a slowing economy, aligning with Warsh's comments on declining inflation.

How the Fed's Abandonment of Forward Guidance Reshapes Market Pricing Logic for Monetary Policy

The institutional significance of Warsh's remarks extends far beyond a routine policy communication. Forward guidance, as the Fed's core communication tool in the post-financial crisis era, has been the main channel for market expectation management over the past decade. Warsh's announcement of "opening a new path" signals that the Fed is actively abandoning prior commitments on the interest rate path.

The substantive impact of this shift is that the market can no longer rely on the Fed's hints to price future interest rate trajectories; each FOMC meeting will become an independent policy negotiation node. Warsh emphasized, "We will hold our next meeting in four weeks, and I hope we can have a real family debate," a tone that directly changes the market's game rules.

From an asset pricing perspective, the disappearance of forward guidance implies a reassessment of the uncertainty premium in monetary policy. The CME Fed Watch tool shows traders' probability forecast for a September rate cut dropped from 80% on Tuesday to 65%. The rising expectation of rate cuts provides upward momentum for both interest-rate-sensitive assets like gold and Bitcoin simultaneously. However, the logic and elasticity of the rallies differ significantly—gold benefits more from expectations of declining real interest rates, while Bitcoin's rebound includes an element of risk appetite recovery.

Gold Stands at $4,064: Dual Drivers of Rate Cut Expectations and Safe-Haven Demand

Gold's rise on July 2 was not an isolated event but the result of multiple macro factors converging. ADP employment data coming in below expectations, combined with Warsh's comments on declining inflation risks, jointly pushed U.S. Treasury yields lower. The 10-year yield fell from recent highs, directly reducing the opportunity cost of holding gold.

From a broader perspective, the World Gold Council previously indicated that gold prices might trade around $4,100 within the year, and the current level of $4,064 is close to that expected range. A recent report from Huatai Securities noted that the current suppressing effect of Fed rate hike expectations on gold is far weaker than in 2022. With short positions crowded and central banks continuing to buy gold as a long-term support, gold's high payout ratio stands out.

Notably, gold experienced a sharp decline of about 14% in the second quarter of 2026, with the $4,000 level becoming a key battleground for bulls and bears. Whether this early July rebound indicates that gold has found a short-term bottom depends on the upcoming June nonfarm payrolls report—the market consensus forecasts 110k new jobs and an unemployment rate of 4.3%. If the data comes in further below expectations, rate-cut trades may deepen, providing additional support for gold.

Bitcoin Returns to $60,000: Similarities and Differences in Logic Behind the Co-Rise with Gold

Bitcoin also recorded significant gains on July 2. According to Gate data, Bitcoin edged up to $59,768. Earlier, Bitcoin had fallen to the $58,000 range, then rebounded over 3% following Warsh's speech, regaining the $60,000 level.

Bitcoin and gold rising in tandem on July 2 appears to be driven by the same macro catalyst—rising rate cut expectations—but the underlying logic differs fundamentally. Gold's rise primarily reflects hedging demand under expectations of declining real interest rates, while Bitcoin's rebound includes an element of risk appetite recovery. When Warsh indicated that inflation risks had declined, market fears of aggressive rate hikes eased, giving risk assets overall breathing room.

However, Bitcoin's volatility characteristics differ sharply from gold. The total amount of long liquidations in Bitcoin over 24 hours exceeded $200 million, reflecting the fragility of the cryptocurrency market's high leverage structure. Bitcoin had already fallen significantly from its all-time high, with the Fear and Greed Index remaining in "extreme fear" territory. This suggests that Bitcoin's current rebound is more a result of short covering and sentiment repair than a trend reversal signal.

Evolution of Gold-Bitcoin Correlation: What Is Changing in Safe-Haven Asset Positioning

The relationship between gold and Bitcoin in 2026 has shown unprecedented complexity. Over the long term, the positive correlation between Bitcoin and gold is weak, with an average correlation coefficient of only about 0.1. However, market data from 2026 reveals an important change: the correlation is strengthening.

Data released by economist Robin Brooks shows that the correlation between Bitcoin and the S&P 500 index rose to 0.55 in late 2025 to early 2026, while the correlation between gold and stocks has also surged above 0.50 in recent months. This shift means that gold is losing its traditional hedging attribute of near-zero correlation with stocks. A correlation above 0.50 implies that gold is more likely to fall alongside stocks during risk-off periods.

At the same time, some data indicate that the correlation between cryptocurrencies and gold turned to a moderate negative -0.69 in 2026—this seemingly contradictory finding precisely illustrates that the relationship is undergoing dramatic structural changes, exhibiting different correlation characteristics across different time scales and market environments. Gold still has central bank-level allocation demand as a underlying support, while Bitcoin's nature leans more towards a risk speculative asset, with sensitivity to liquidity and market risk appetite far exceeding that of traditional gold.

The evolution of the correlation essentially results from the convergence of gold's "risk asset-ization" and Bitcoin's "macro sensitivity" within the same macro cycle.

Differentiated Performance of Gold and Bitcoin in Rate-Cut Trading: Who Benefits More?

"Rate-cut trading" is one of the most influential narratives in the macro outlook for 2026. Within this framework, the degree and logical path of benefits for gold and Bitcoin differ significantly.

Gold benefits from rate cut expectations through a more direct chain: rate cut expectations → lower nominal rates → lower real rates → lower cost of holding gold → higher gold prices. This transmission mechanism has been validated multiple times historically with clear economic logic. The current price of $4,064, combined with the ADP data undershooting expectations and strengthening rate cut bets, places gold in a relatively favorable position within "rate-cut trading."

Bitcoin's benefit logic is more complex. Rate cut expectations can indeed improve overall liquidity and risk appetite, theoretically supporting Bitcoin. However, Bitcoin is also constrained by multiple factors such as regulatory environment, technicals, and capital flows. JPMorgan estimates that investor allocations to "devaluation trades" (primarily gold and Bitcoin) have returned to levels seen in March 2025, indicating that both asset classes are being considered within the same framework at the institutional level.

Looking at performance from 2026 to date, gold is down about 6% year-to-date, while Bitcoin is down about 31%—a stark difference showing that under the same macro narrative, the actual performance of the two assets diverges dramatically. Gold's central bank buying demand and physical attributes provide a price floor, while Bitcoin's high volatility subjects it to greater downside pressure amid macro uncertainty.

Eve of Nonfarm Payrolls: Key Variables After Gold at $4,064 and Bitcoin at $60,000

The price action on July 2 is just a prelude. The U.S. June nonfarm payrolls report was released early on July 3, which will determine the short-term direction for gold and Bitcoin.

If nonfarm payrolls come in below the market expectation of 110k, rate cut expectations will further intensify. Some analysts suggest that if the data falls below 85k, it could push gold into the resistance zone of $4,200 to $4,370 due to increased safe-haven demand and rising rate cut expectations. Bitcoin may also test further upside resistance as risk appetite improves.

If nonfarm payrolls beat expectations, it could reverse the current rate-cut trading logic. Warsh has made clear that "tactics, strategy, and other content have not yet been determined," meaning the Fed's policy path remains highly uncertain. The probability of a September rate cut dropped from 80% to 65%, but 65% is still a non-negligible probability.

For investors in gold and Bitcoin, the asset pricing logic after the nonfarm payrolls data will face a critical test. The relative performance of the two assets in "rate-cut trading" will ultimately be determined by the data itself and the market's interpretation of it.

Summary

Gold rising to $4,064 and Bitcoin returning to $60,000 are the result of three factors converging: Warsh's announcement of abandoning forward guidance, narrowing U.S. Treasury yields, and ADP employment data falling below expectations. Gold benefits from the direct transmission of lower real rate expectations, while Bitcoin's rebound reflects more of a temporary recovery in risk appetite. The correlation between gold and Bitcoin has been undergoing structural changes since 2026, and their performance differences in "rate-cut trading" reveal the distinct positioning of traditional safe-haven assets and digital assets in the macro cycle. The upcoming nonfarm payrolls data will be the key variable to test the sustainability of this round of price moves.

Frequently Asked Questions (FAQ)

Q: What was the main reason for gold's rise on July 2?

Warsh stated that inflation expectations and inflation risks have both declined in recent weeks, combined with U.S. ADP employment data coming in below expectations, which together pushed U.S. Treasury yields lower, reducing the opportunity cost of holding gold, and spot gold consequently rose to $4,064.

Q: How does Bitcoin's performance in this rally differ from gold's?

Both benefited from rising rate cut expectations, but the logic differs. Gold's rise primarily stems from expectations of lower real interest rates, while Bitcoin's rebound reflects more of a temporary recovery in risk appetite. Bitcoin's total long liquidations exceeded $200 million within 24 hours, highlighting its continued high volatility characteristics.

Q: What is the current level of correlation between gold and Bitcoin?

Over the long term, the positive correlation is weak (average around 0.1), but market data from 2026 shows the correlation is strengthening. The correlation between gold and the S&P 500 index has risen above 0.50, weakening gold's traditional hedging attribute.

Q: How will the upcoming nonfarm payrolls data affect gold and Bitcoin?

If nonfarm payrolls fall below expectations, rate-cut trading may deepen, and gold could test resistance above $4,200; Bitcoin may also continue to rebound as risk appetite improves. If the data beats expectations, it could reverse the current trading logic.

Q: In "rate-cut trading," which is more advantageous, gold or Bitcoin?

Based on performance from 2026 to date, gold's decline (about 6%) is far smaller than Bitcoin's (about 31%). Gold has central bank buying demand and physical attributes as support, while Bitcoin's high volatility subjects it to greater pressure amid macro uncertainty. The degree and path of benefits for the two assets in "rate-cut trading" differ fundamentally.