Gold hit an all-time high of $3,245 an ounce as the dollar index fell below 100 for the first time in three years. Meanwhile, renowned investment bank Goldman Sachs now expects gold prices to reach $3,700 an ounce by 2025.
The dollar's identity crisis
Something unimaginable is happening in global markets. The dollar is losing its status as the world's financial safe haven. With the dollar index (DXY) currently below 100, it's a three-year low. Investors are no longer rushing to buy dollars during market turmoil. Instead, they are buying gold at a record pace.
Gold competes with the dollar for safe-haven supremacy
Gold has emerged as the clear winner in this chaos, with prices reaching an unprecedented $3,245 an ounce. Boudia said the recent drop in gold prices is not a failure of gold, but a "typical liquidity liquidation." "In moments of stress, people tend to sell gold not because it's weak, but because it's liquid," he explained. "Essentially, traders use gold as an ATM when they get a margin call."
The impact of trade conflicts on gold prices
The tensions in the U.S.-China trade war are at a level not seen in decades. The recent events are well known: the U.S. imposed tariffs of up to 145% on Chinese imports, and China retaliated with 125% tariffs on U.S. goods
Although gold prices retreated slightly after Trump eased off some of his tariff proposals (a 20% tariff on Chinese electronics rather than a broader measure), Goldman Sachs believes this is just a pause in the gold rally.
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