Gold surges as investors lose faith in U.S. Assets


The latest rally began during the Asian trading session on Monday and extended through the North American session, with spot gold currently trading at a record-high of $3,480/oz, marking a 2% daily increase. Key technical resistance levels failed to hinder the move upward.


Gold is now approaching its inflation adjusted all-time high, previously set in January 1981.


One clear signal of renewed momentum is the surge in institutional investment: SPDR Gold Shares (GLD), the world’s largest gold ETF, saw assets under management exceed $100 billion for the first time in history last week.


“As geopolitical volatility and global uncertainty fuel risk aversion, investors are increasingly turning to gold as a strategic safe haven,” analysts at State Street Global Advisors (GLD's marketing firm) stated.


Gold rallies as Dollar weakens and trade tensions escalate


This marks gold’s third 3%+ weekly gain this month, surpassed only by the explosive moves in November 2008 during the global financial crisis. Analysts note a parallel environment today where gold benefits from a weaker USD.


The U.S. Dollar Index (DXY) recently fell to 98.40, its lowest level in over three years, amid sustained selling pressure.


Meanwhile, the 10-year U.S. Treasury yield remains above 4.4%, indicating inflation concerns are still present, but confidence in the FED’s ability to respond appears diminished.


 


China vs U.S. Trade: More than just tariffs


🔹 China has escalated its trade standoff with the U.S., warning other nations against aligning with American demands that isolate Beijing.🔹 Beijing slashed U.S. oil imports by 90%, instead importing record volumes of Canadian crude and significantly increasing soybean purchases from Brazil.🔹 While Trump claims to be making progress with Japan, no official trade deal has been confirmed, and talks appear stalled.


 


Powell under threat: Dollar at riskPresident Trump’s repeated comments about wanting to fire FED Chair Jerome Powell have further undermined trust in U.S. monetary policy. Analysts at Brown Brothers Harriman warned that removing Powell would be a “point of no return” for global confidence in the FED.


“Why would a global investor want to hold assets in a country where central bank independence is at risk?” they noted.


“Forex markets react swiftly to policy missteps, and while Trump has long favored a weaker dollar, these aren’t the reasons investors want.”


 


 


Expert forecasts: Gold may still be undervalued


In a recent interview with Kitco News, Eric Strand, founder of AuAg Funds, said: “In the current environment, gold still looks cheap below $4,000/oz.”


 


According to Commerzbank’s head of FX and commodity research, gold prices will remain supported as economic instability weighs on global growth, likely forcing the Fed to cut interest rates in the near term.


 


While Jerome Powell recently downplayed the possibility of imminent rate cuts, he acknowledged that tariffs pose risks of higher inflation. However, markets still expect the Fed to ease policy as early as this summer especially if no trade deal materializes soon.