(Kitco News) – After one of the strangest weeks for global markets in recent memory, gold once again found itself the premier asset, buoyed upward by waves of uncertainty and fear.
Spot gold kicked off the week trading at $3,032.32 per ounce, and after a quick dip down to test support at $2,978 early Sunday evening, the yellow metal rose back above $3,000 during the Asian trading session.
North American markets then opened and drove it down to $2,959, but this would be the lowest price for gold this week… though there would be plenty of volatility ahead.
Monday and Tuesday saw spot gold trade in a relatively narrow range between $2,980 and $3,017 per ounce, with support holding on every retest. But it was the Asian open on Tuesday evening that began gold’s epic run, with spot gold coming off $2,980 support to rise all the way to $3,073 by the North American open on Wednesday. By 1:00 p.m., spot gold had hit a new all-time high of $3,092 per ounce.
Then came President Trump's shock announcement at 1:18 p.m. EDT that reciprocal tariffs would be paused for 90 days on every nation except China. The move sparked a massive rally in equities, Bitcoin and other risk assets, and a sharp sell-off in gold, though by 3:30 p.m. the yellow metal had erased all its losses to test $3,100 per ounce.
The risk-on sentiment was short-lived, however, as Thursday and Friday saw equities chop sideways as markets came to terms with the ever-increasing countermeasures announced by the United States and China. And with the U.S. dollar index dropping below 100 and Treasury yields rising out of their multi-decade range, gold was the ultimate beneficiary as the last safe haven standing.
Spot gold hardly took a breath after breaching $3,100 dollars per ounce late Wednesday evening, and by the North American open on Thursday morning, the yellow metal was trading above $3,140 per ounce. Asian traders then easily drove the precious metal through $3,200 per ounce, and after a successful retest of $3,190 shortly after 1:30 a.m. Friday morning, the yellow metal marched higher still, ultimately topping out at $3,245.48 shortly after noon Eastern.
From there, market participants were content to trade within a $20 range heading into the weekend.
The latest Kitco News Weekly Gold Survey showed industry experts as bullish as ever before, while retail traders also grew more optimistic about gold prices with everything else weakening around them.
“Gold? To the moon,” said Marc Chandler, managing director at Bannockburn Global Forex. “Many are talking about the capital strike against the US and the demise of the greenback. Market turmoil and sharp drop in the dollar offsets the higher rates and drives the yellow metal to record levels. It is hard to talk about resistance, but the next target may be $3300, and $3500 in the slightly longer-term.”
“Up,” said Adrian Day, president of Adrian Day Asset Management. “The latest pullback, like all the other recent pullbacks, was very short-lived. Gold clearly has momentum, with many buyers in the wings.”
“Up,” said Darin Newsom, senior market analyst at Barchart.com. “It’s the only logical conclusion given the state of geopolitics today when everything hinges on what one person - one person - posts any given day to social media.”
“Up,” said James Stanley, senior market strategist at Forex.com. “This isn’t a move that I’d want to fade. I’ve stayed bullish in these surveys for quite some time and I see no need to change that at this point.”
Daniel Pavilonis, senior commodities broker at RJO Futures, said this week’s movements in the bond markets have supercharged gold, at least in the near term.
“Gold was going up prior to ‘Liberation Day,’ prior to all the retaliatory tariffs,” he said. “We've seen some volatility just because of uncertainty, but I think ultimately the market has had a great run.”
Pavilonis said the main risk he sees to gold prices is Fed intervention in the bond market, which doesn’t seem very likely right now. “The interest rate curve has been to some extent managed by the Fed,” he said. “Since Trump's been elected, it seems to be pretty hands off now, and I think they're letting the yields move higher. The longer-term yields are just an indication that the bond marketing expects inflation to be much higher. Obviously, gold likes that.”
“If you see a situation where maybe the longer yields start to tank, you may see some near-term volatility in gold,” he added. “Maybe a pullback, some more profit taking. But I think ultimately that this cannot be stopped now. The long-term yields have broken out of their downward channel for the last 45-plus years, and now I think this is a regime change, unless the gold market is somehow manipulated through an extension of astronomical margins on exchanges to bring down the price or something of that nature, which they did in 2010.”
“I think gold can continue to move much higher if inflation is expected to be much higher.”
Regarding reports that it’s not China but European governments dumping Treasuries, Pavilonis said he doesn’t think it’s being done as a form of retaliation for Trump’s trade policy, but simply out of fiscal necessity.
“Europe has been just basically in a recession, there's been no growth over the last five, six years, since Covid,” he said. “I think that when European countries are coming in to sell Treasuries, they're using that money to support their economies. I don't think it's a bad-faith measure. It’s previous mismanagement, and now they need the funds to rectify that. You're taking money out of your savings account to try to patch the holes in your house, because you know you had some damage.”
As for positioning in the market, Pavilonis said runs like the one gold has been on tend to be followed by trend changes, and he thinks it would be wise for investors to protect their long positions with some hedges.
“We're in the very beginning stages of big changes,” he said. “You're seeing tariffs change the dynamics of trade, and if you're seeing big countries make changes, then there's going to be changes globally. Obviously, that's one of the reasons why gold is going up right now, but I don't think it's a bad idea to have some hedges on going out, three, four months, way out of the money, but that that can balloon up. I was doing that with the equities markets since last year, going out three months, going out four months, at 20% move away, and options that were worthless ballooned up in value.
“The same for gold,” he said. “If gold sells off $600, if we get back down to $2,500, $2,700, somewhere around there, I'm sure you're going to see some buying coming in.”
This week, 16 analysts participated in the Kitco News Gold Survey, with Wall Street reaching a near-unanimous bullish verdict on gold’s near-term prospects. Fifteen experts, or 94%, expected to see gold prices rise once again during the week ahead, while none predicted price declines for the precious metal. The one outlier, representing 6% of the total, saw gold holding steady at these elevated levels.
Meanwhile, 275 votes were cast in Kitco’s online poll, with Main Street sentiment strengthening as everything that isn’t yellow metal declines. 189 retail traders, or 69%, looked for gold prices to rise higher next week, while another 50, or 18%, expected gold to trade lower. The remaining 36 investors, representing 13% of the total, saw prices trending sideways during the week ahead.
Central banks are once again in the spotlight next week, with investors anxious to hear from Federal Reserve Chairman Jerome Powell when he speaks about the outlook at the Economic Club of Chicago on Wednesday, the same day the Bank of Canada will announce its monetary policy decision, with analysts expecting the BoC to keep interest rates unchanged.
Then on Thursday, the European Central Bank is expected to cut its key interest rate to continue supporting the region’s economy.
Other economic data next week include the Empire State Manufacturing Survey on Tuesday, and U.S. weekly jobless claims, housing starts and building permits, and the Philly Fed Manufacturing Survey on Thursday.
“I am bullish on gold for the coming week,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “The US Dollar appears to be generally trending downward and the uncertainties which have been supporting gold appear likely to drag on for some time.”
“Higher,” said Rich Checkan, president and COO of Asset Strategies International. “Expect to see a little short-term profit-taking as a result of the strong move up in gold the past few days. But that will not keep gold from inching even higher next week. Big Mo (momentum) is on gold’s side at the moment.”
Adam Button, head of currency strategy at Forexlive.com, said the United States is putting itself in an impossible position right now. “Everyone is looking for a safe harbor, and gold is working.”
“I think you have an FX market and a gold market that thinks something's going to go wrong,” Button said. “It might be a jump in inflation, it might be a dive in growth, it might be an impairment in productivity. And it could be all of those things at once.”
The scenario is complicated to gameplan, however, because even stagflation could change the calculus in short order.
“If you get beyond even the first year, and then I think you’ll have bonds pricing in lower inflation, because you have a spike in inflation and you're going to have a crash in growth, and then you could maybe have a low inflation again just coming with poor growth,” he explained. “It doesn't matter really which one of those it is, or all of them. But you just don't want to be in a place where those things are happening.”
Button said that the situation in Europe looks better by comparison. “If you look at Europe, okay, you might have some knock-ons on slower growth, but you're going to get a lot of cheap Chinese imports, and have more negotiating power on that, so you have this disinflationary impulse there, and you have a central bank that's going to be able to cut rates because of that,” he said. “And you have ample fiscal room in Germany, and you're not going to have allies retaliating, and valuations are way cheaper, and even the structure of the euro is going to prevent the kind of fiscal largess the U.S. is embarking on.”
He added that this week’s Supreme Court ruling that President Trump could fire commissioners at independent agencies opens the door to the executive seizing control of the central bank.
“What's the trade if Trump fires Powell? Go all in on gold,” Button said. “What does gold go to in that world? That's $5,000 gold.”
“Every road leads to gold right now,” he said. “It's just dark times ahead, and the market is telling you that gold is the winner.”
“Up, unless we fail decently back below 32245 (+2 tics per/hour starting at 12:20 p.m. EST),” said Michael Moor, founder of Moor Analytics. “In a Higher time frame, we are still in an overall bull trend from November 2015, and likely in the later stages. Part of this is a prediction I made of $151 minimum, $954 (+) maximum from $2,148.4 – of which we have attained $1,100.6 FULFILLING THE MAXIMUM! This is OFF HOLD.”
“On a Lower time frame, the trade above 27041 (-.6 of a tic per/hour) has brought in $544.9 of strength,” he added. “The trade above 27247 (-.6 of a tic per/hour) projected this upward $55 minimum, $235 (+) maximum—we have attained $524.3. These are OFF HOLD. On 3/3 we left a minor bullish reversal below—we have rallied $347.9 from the 29011 open.”
And Kitco Senior Analyst Jim Wyckoff expects gold prices to maintain their current upward momentum next week. “Higher on safe-haven demand, bullish charts.”
At the time of writing, spot gold last traded at $3,236.84 per ounce for a gain of 1.94% on the day and 6.80% on the week.
