Gold remains well-supported in the current uncertain market environment. Fears of tariff threats, geopolitical risks, potential Fed rate cuts this year, and sustained central bank demand are expected to further bolster gold in 2025.

Gold: Let’s go to $3000

Gold's relentless bull market marches on, with prices inching closer to the USD 3,000/oz mark. President Trump’s push to reshape the global economic order appears to be adding momentum to this rally. A key indicator, the gold-oil price ratio, has surged to 42x — the highest since 2020 — well above its long-term average of 31x since 1980. This signals that Trump-driven policies could reignite global inflation. Notably, the ratio hit 37.5 on January 26, surpassing its historical average, suggesting a pivotal moment for the market. Investors anticipate further gains as stricter sanctions may lift oil prices while gold advances alongside a robust US dollar. Markets currently project gold at USD 3,080/oz by the end of 2025, with clear risks skewed to the upside.

Gold began the year at record levels, driven by expectations that Trump's tariff strategies might weaken the US dollar. Central banks have been ramping up gold reserves while scaling back dollar holdings, a trend that accelerated following the US's freezing of Russia’s foreign-exchange reserves in 2022. While alternative currencies such as the euro, yen, and yuan could benefit, gold remains the favored hedge due to its enduring stability. Inflation concerns and economic uncertainty linked to Trump’s policies further bolster gold's appeal, as investors seek safe-haven assets amid a shifting global financial landscape.

In a scenario marked by heightened tariffs, rising trade tensions, stronger inflation, growing budget deficits, and increased risks to economic growth, gold demand would be fueled as a hedge against currency debasement. Investors looking to protect against inflation through real assets are likely to turn to gold, supported by higher yields, a firm US dollar, and elevated gold prices.

Alternatively, if trade tensions ease, inflation stays controlled, and the focus shifts back to a Federal Reserve easing cycle, gold would still find bullish support. Falling real yields, typical during a Fed rate-cutting phase, would sustain gold's momentum. In this more benign scenario, inflows into gold ETFs would play a crucial role in keeping prices elevated, reinforcing gold’s traditional allure during periods of monetary easingXAU/USD 4H

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