Amid ongoing discussions surrounding the implications of a government shutdown, the topic of gold as a potential safe haven has come to the forefront. However, the dynamics of the gold market in 2025 suggest that it is behaving less like a traditional safe haven and more like a vibrant asset class undergoing significant movements.
As we entered September, gold’s price action displayed a highly attractive technical formation. Throughout the months from April to August, prices established a sequence of higher lows, forming what appears to be a classic continuation pattern. This setup is noteworthy, particularly since the ETF for gold (GLD) has successfully broken out of similar patterns on three previous occasions. Although breakouts rarely occur with absolute precision, recent performance by GLD has shown a remarkable close alignment with textbook breakout principles over the last four weeks.
Details from the weekly Relative Strength Index (RSI) indicate a spike approaching 80, reflecting a saturated buying condition. This robust trend illustrates that momentum traders are not only backing the breakout but are willing to continue supporting it, indicating strong conviction in the market. Historically, since the start of 2024, each notable follow-through move has seen the weekly RSI reach around 80, suggesting a familiar cycle where periods of strong performance eventually necessitate phases of moderation.
Currently, GLD has already eclipsed its measured move target near 340, with technical indicators hinting at an impending period of consolidation. A closer examination of the monthly chart reveals that the past decade has been characterized by a series of lengthy consolidation phases followed by upward breakouts. The unfolding of gold’s market action from last year can be interpreted as several traditional trading boxes, each ultimately resolved to the upside. Even if a pause in growth proves necessary now, the historical pattern remains consistent: periods of consolidation generally precede the emergence of the next upward leg.
The last two months saw a remarkable 17.3% gain for GLD, marking its best performance within a two-month span since at least 2014. Generally, significant surges like this require subsequent pauses, with gold tending to consolidate before resuming its upward trend. As this happens, the question remains: if capital begins to exit GLD, where might it flow next?
Bitcoin, which has seen underperformance in recent weeks, could be a potential beneficiary of this capital rotation. Recent discussions highlight Bitcoin’s setup for a potential bullish short-term pattern, especially as it has begun showing signs of recovery. A relative analysis comparing Bitcoin to GLD since mid-2023 indicates that while Bitcoin’s performance has fluctuated with pullbacks, its relative strength relative to gold could reinforce a transition of investments back to Bitcoin, particularly as gold’s indicators read as overextended in the short term.
Both cryptocurrencies and gold have shown various points of alignment throughout the year, especially in months like January and the period from July through August. This implies that gold’s current outperformance could be due for a correction, aligning with previous patterns noted in April where Bitcoin began gaining momentum just as gold reached a peak. The performance gap between the two has widened recently, with GLD now outperforming Bitcoin by more than 20% since the beginning of the year.
As we approach Q4, the broader seasonal trends in Bitcoin will be critical to observe, since it has historically demonstrated a propensity to rally in October and November. This seasonal pattern is widely recognized, potentially creating a self-fulfilling prophecy, particularly after a generally weak September. As such, there is potential for capital to rotate back into Bitcoin, transforming the current landscape and possibly moderating gold’s recent gains as we move further into the final months of the year.
Investors and analysts alike will be closely monitoring these two assets in the coming weeks, with key dynamics set to influence market trends as October and November draw nearer.
