Trump said on Monday the US economy could slow down unless
interest rates are lowered immediately, repeating his criticism of Fed Chair
Jerome Powell as being slow to act and calling him a "major loser".
That was followed by a furious flight from US assets which
undermined Wall Street and the dollar, while concerns about the independence of
the Federal Reserve piled fresh pressure on Treasuries.
"Gold is recalibrating to reflect what can only be
described as epic changes in the global financial system. And those changes are
a widespread and fundamental shift in confidence in the world’s reserve
currency and its bond markets," said independent analyst Ross Norman.
Bullion, renowned as a hedge against uncertainties and a
highly liquid asset, has surged more than US$800 since the start of the year.
It surpassed US$3,300 last Wednesday, and its strong momentum pushed it up by
nearly US$200 in just a few days.
Adrian Ash, director of research at BullionVault, said
central bank demand is very likely chasing gold's move higher, because Trump
2.0’s chaos only hardens gold’s appeal as a geopolitical asset".
In the final quarter of 2024, when Trump won the US
election, central bank purchases accelerated 54% year-on-year to 333 tons,
according to an estimate from the World Gold Council.
Data showed that China's central bank added gold to its
reserves in March for the fifth straight month. China is considering setting
up overseas warehouses to aid international settlement of specific
products on the Shanghai Gold Exchange, its central bank said.
ANZ last week also raised its year-end gold price forecast
to US$3,600.
Asked about a pause in the rally, analysts and experts said
any correction is likely to be short-lived, and greater gains are most likely
on the horizon if instability persists.
"It is hard just now to see a scenario where gold could
correct sharply lower as a physical floor of Johnny-come-lately buyers would
support or cushion the decline," said Norman.
Julius Baer analyst Carsten Menke said a major road block
for gold would be a less confrontative President Trump, either on the side of
trade or on the side of monetary policy - both of which seem rather unlikely at
the moment.
Spot gold has hit 28 record highs so far in 2025, of which
16 are above the US$3,000/ oz milestone. Prices are up 31% so far this year,
after ending 2024 with a 27% annual rise.
