Dual Hedging Era: Gold and Bitcoin Hit New Highs! Turbulent US Political Landscape and Central Bank Gold Purchases Drive a Parabolic Rise?

Due to geopolitical instability factors such as the risk of a U.S. government shutdown and political turmoil in France, risk aversion in the global financial markets has sharply increased, driving both gold (XAU) and Bitcoin (BTC) to set historical highs this week. The price of gold has surpassed the key level of $4,000, while Bitcoin has skyrocketed to over $125,000. The strong performance of these two major assets not only highlights investors' deep concerns about Inflation, surging debt, and political instability but also signifies that the market's preference for inflation hedging tools and reserve asset alternatives has become a dominant trend for 2025.

Gold Hits New High of $4,000: Interest Rate Cuts, Gold Purchases, and Geopolitical Risks Resonating

The price of gold continues to soar in 2025, reaching a new record of over $4,000, driven by multiple factors.

· Core driver: Strong gold buying demand from emerging market central banks is the main support. In addition, the weakening of the dollar has also provided momentum for gold's upward movement.

· Geopolitical Risks: The resignation of the French Prime Minister and Japan's shift towards increased fiscal stimulus measures have not only intensified geopolitical tensions but also heralded rising inflationary pressures. During periods of political instability, the value of gold as a traditional hedging tool is highlighted.

· Federal Reserve Policy Shift: The Federal Reserve's inclination towards a rate cut monetary policy has provided additional support for gold. A low interest rate environment reduces the opportunity cost of holding gold.

· Stagflation concerns: Current inflation expectations remain above 3.5%, while accompanied by stagnant economic growth, the signals of stagflation risk are becoming increasingly evident. In such a macroeconomic environment, gold tends to outperform other assets.

XAUUSD Technical Analysis: Breaking $4,000 May Initiate Parabolic Rise

The technical pattern of the gold market indicates that strong upward momentum will continue.

· Key Breakthrough: The rise in gold prices began with a breakthrough of the $2,075 level, then steadily approached the key $4,000 area, with no signs of slowing down at present.

· Strong momentum: After breaking through the $3,500 mark, the price continues to maintain a strong upward trend, indicating that gold is still in a robust ascending phase, and even major resistance levels may be breached, with prices likely to continue a parabolic rise.

· Weekly Signal: The weekly chart shows that gold prices are breaking through the upper boundary of the ascending expanding wedge pattern (near $4,000). If the weekly closing price can confirm a breakout above $4,100, it will confirm this breakout and indicate further upward potential.

· RSI Interpretation: Although the Relative Strength Index (RSI) is currently in the overbought zone, it is noteworthy that the strongest bull markets in gold history often occur when the market is in an overbought state, which further reinforces the view that the upward momentum will continue.

Bitcoin Strongly Breaks Through 120,000 USD: Policy Benefits and Dollar Devaluation Panic

Bitcoin is accelerating towards the resistance range of 140,000 USD after breaking through the key level of 120,000 USD.

· Dual driving force: This round of the bull market is driven by pro-cryptocurrency policies in the United States (although the government shutdown has caused short-term obstacles) and growing concerns over the depreciation of the US dollar.

· Institutional Adoption: The continued adoption of Bitcoin by major institutions has increased market awareness and brought strong buying pressure.

· Hedging appeal: As the United States continues to face high fiscal deficits and increasing political dysfunction, trust in traditional assets is waning. The decentralized nature of Bitcoin makes it an extremely attractive alternative during times of financial stress.

· Technical Outlook: The Bitcoin daily chart shows that the price is trading within an ascending expanding wedge. After breaking through the $73,000 and subsequent $105,000 levels, the price has consolidated strongly above the $105,000 area, indicating that Bitcoin may continue to soar to the next immediate resistance level of $140,000.

Gold and Bitcoin Outperform S&P 500 Index in 2025

Although the stock market performed steadily in 2025 (S&P 500 rose over 14%), the performance of gold and Bitcoin was noticeably superior.

· Annual performance comparison: So far, gold prices have surged over 50%, while Bitcoin has increased by more than 30%. Both have significantly outperformed the US stock market.

· Volatility returns: Based on the past 12 months, Bitcoin's increase has reached over 95%, far exceeding the approximately 50% increase of gold. This highlights Bitcoin's higher volatility and its ability to provide greater return potential in a highly dynamic market.

· Asset allocation signals: Gold has outperformed the S&P 500 index in four of the past seven years. This divergence in the returns of asset classes highlights the importance of a diversified investment approach when the effectiveness of traditional monetary policy tools diminishes.

Conclusion

Under the dual shadows of the U.S. government shutdown and global political turmoil, gold and Bitcoin have established their dominant asset status as inflation hedges and reserve alternatives in 2025. As central banks around the world tend to lower interest rates and political instability spreads, both are expected to continue gaining attention. Gold offers historical stability and institutional trust, while Bitcoin brings higher volatility and tremendous upside potential. Investors should anticipate intensified price action in both markets, especially when inflation expectations remain high and traditional monetary tools are limited. Technically, the bullish signals are clear with gold breaking above $4,000 and Bitcoin targeting $140,000; any short-term pullbacks may be seen as opportunities to buy these two safe-haven assets.

Disclaimer: This article is for informational purposes only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make cautious decisions.