Gold soared to an unprecedented peak this week, riding expectations of US Federal Reserve rate cuts, a tumbling dollar, and worries over the Fed's independence.
On Wednesday, spot gold reached $3,578.50 per ounce before a modest 0.4% pullback on Thursday, driven by profit-taking. Yet, the metal has surged over 30% so far this year.
Markets are betting heavily on looser US monetary policy: CME Group's FedWatch tool shows a 98% chance of a Fed rate cut this month.
Ricardo Evangelista, senior analyst at ActivTrades, says the bearish dollar outlook, US asset avoidance, and tariff-related uncertainty are all supportive for gold.
Political dynamics are adding fuel. President Trump's public criticism of Fed Chair Jerome Powell and reported interference attempts have sparked fears about the Fed's independence, which ECB President Christine Lagarde called a very serious danger to the global economy.
Traders at Heraeus Metals note that waning confidence in US institutions is driving investors toward safe-haven assets like gold.
Since January, the dollar has slid nearly 11%, making gold more affordable for international buyers. Trump's tariff agenda, now headed to the Supreme Court, adds another layer of unpredictability.
Institutional behavior is shifting. Data from the World Gold Council reveals central banks plan to boost gold reserves over the next five years, reducing dollar holdings.
With fundamentals pointing upward, institutions including Standard Chartered anticipate new record highs for gold prices.
Reference(s):
cgtn.com
