Rising debt concerns in the US are driving capital into the alternative assets just as Hong Kong is registering higher gold deliveries and introducing stablecoins to institutional investors.
Gold and bitcoin prices are moving higher. Here’s why.
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Gold prices rose 5 percent last week while bitcoin gained almost 20 percent as deficit worries and higher US Treasury yields are pushing capital into the yellow metal and digital assets, strategists say.
Borrowing costs in Japan and across Europe have also climbed in tandem. Surging oil and energy prices are instigating inflation pressure, resulting in steeper yields as investors demand higher compensation on their savings.
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Fixed income uncertainty is prompting the shift to alternative assets, writes Samer Hasn, senior market analyst at XS.com, noting that rising Treasury yields are amplifying fiscal anxieties over the sustainability of US public debt, which reached a new threshold of US$40 trillion last week.
Gold and bitcoin: Hong Kong developments
The price momentum for gold and Bitcoin coincides with Hong Kong deepening its financial hub ambitions to integrate both the yellow metal and digital currencies. Last week, the Hong Kong Exchange reported that its gold futures contracts saw the physical delivery of 145 kilograms, breaking the previous record of 63 kilograms set back in December 2018.
The development follows the July introduction of a Delivery Connect mechanism with the Shanghai Gold Exchange, a structure similar to the Stock and Bond Connects, writes Christopher Wood, strategist at Jefferies, a brokerage.
Besides strengthening its position as a gold trading hub, Hong Kong is also looking to increase its physical holdings from 200 to 2,000 tonnes, providing a price catalyst for industrial and warehouse assets that have lagged behind the city’s real estate recovery.
Digital assets have also rallied. Earlier this month, HKD At Par (HKDAP), a stablecoin backed by Standard Chartered and Anchorpoint Finance, became available to institutional distributors and professional investors in what advocates hope can facilitate commercial applications for fiat-backed tokens.
[See more: China pushes digital yuan for cross-border payments using Macao link]
Back in April, the Hong Kong Monetary Authority (HKMA) approved both HSBC and the Standard Chartered-backed consortium to issue fiat-backed stablecoins under a business-to-business-to-consumer model that could uphold real world efficiencies, such as lowering costs and expediting cross-border transactions.
Asia’s largest Bitcoin summit, Bitcoin Asia 2026, is meanwhile scheduled to be held in Hong Kong on 27 and 28 August, with 150 speakers addressing an estimated 10,000 delegates.
