Gold Rebounds as Geopolitical Tensions and Fed Speculation Fuel Record Rally
(Bloomberg) -- Gold prices climbed in early Asian trading on Friday, reclaiming momentum after a sharp intraday sell-off briefly interrupted one of the commodity's most powerful rallies in modern history. The rebound underscores how geopolitical instability and shifting monetary policy expectations are creating a perfect storm for the precious metal.
Bullion advanced as much as 1.4%, following a tumultuous previous session that saw it plummet 5.7% from a record peak of $5,595.47 an ounce before paring losses. Analysts point to a confluence of factors: simmering international tensions, a broad retreat from traditional sovereign assets, and rampant speculation about the future leadership of the U.S. Federal Reserve.
The geopolitical landscape remains fraught. In recent statements, President Donald Trump has issued fresh threats toward Iran and warned of tariffs on nations supplying oil to Cuba, continuing a pattern of policies that have unsettled global markets and alliances. This environment has burnished gold's traditional role as a safe-haven asset, with prices up more than 25% year-to-date.
"The market is trading on two forms of uncertainty: geopolitical and monetary," said Richard Vance, a veteran metals strategist at Hartford Capital. "The President's comments on Iran and trade keep the risk premium elevated, while the looming Fed chair nomination is a wild card for the dollar and rates. Gold feeds on both."
Adding fuel to the rally is the so-called 'debasement trade,' where investors seek hard assets as faith in fiat currencies wanes. The Bloomberg Dollar Spot Index fell again Friday, extending its weekly decline. Simultaneously, Trump confirmed he would name his nominee for Fed Chair later in the day, reiterating his desire for a leader who will lower interest rates. A more accommodative central bank stance is typically bullish for non-yielding gold.
Robust physical demand, particularly from China, provides a fundamental floor under prices. Chinese domestic premiums have soared well above international benchmarks, indicating strong local buying interest even at record-high levels. This speculative fervor has spilled into other metals, with copper also witnessing significant gains.
As of 8:10 a.m. in Singapore, spot gold was up 1.3% at $5,447.18 an ounce. Silver surged 2.4% to $118.43, while platinum and palladium also traded higher.
Market Voices
Eleanor Shaw, Portfolio Manager, Global Resources Fund: "This isn't just a flash in the pan. The structural drivers—de-dollarization trends, central bank buying, and fiscal concerns in major economies—suggest a sustained re-rating for gold. The recent volatility is healthy consolidation."
Marcus Thorne, Independent Economic Analyst: "The rally is built on a house of cards: speculative froth and fear-mongering. Real interest rates, when adjusted for the latest inflation prints, aren't that negative. Once the Fed nominee is known and the initial geopolitical shock fades, you'll see a brutal correction. This is a bubble fueled by headlines."
Dr. Aris Tanaka, Economics Professor at Stanford University: "The market is correctly pricing in a regime shift. The era of predictable globalization and central bank independence is being questioned. Gold is the clearest barometer of that systemic uncertainty."
Janet Li, Retail Investor from Shanghai: "It's crazy. Everyone is talking about gold. We're buying it through apps, at banks, even jewelry as an investment. There's a real fear of currency depreciation and a sense that tangible assets are the only safe bet left."
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