The Rally Flames Still Not Extinguished, Where Will Gold Prices Go?
Gold prices weakened after US President Donald Trump withdrew his tariff threats against European countries and claimed there was a "framework for a future agreement" on Greenland. Previously tense markets began to calm, reducing demand for safe-haven assets like gold.
Gold briefly fell by around 1.2%, retreating from a three-day rally that pushed prices to a record high above $4,888/oz on Wednesday. Trump announced the "framework" via social media after meeting with NATO Secretary General Mark Rutte, but without providing any details.
Previously, Trump's maneuvers on Greenland had sparked a diplomatic crisis with NATO allies in Europe and roiled the market—a situation that actually boosted gold's appeal as a safe haven. Despite the correction, gold is still up more than 4% in a week, continuing a long rally that has set record after record over the past year.
Several analysts believe the latest turmoil demonstrates how commodities, energy, and supply chains are increasingly being used as tools of geopolitical pressure. This logic maintains gold's medium-term support, as markets tend to seek refuge when global uncertainty increases.
At the same time, political pressure on the US central bank has added fuel to the fire for the precious metal. The Trump administration has renewed its attacks on the Fed, and Trump's attempt to fire Fed Chair Lisa Cook has fueled concerns that the central bank's independence could be compromised—a sensitive issue for financial markets.
The US Supreme Court hearings have shown the justices wary of such moves, as they believe they could shake confidence in US monetary policy. The court is scheduled to issue a ruling no later than July, so the uncertainty could linger.
In terms of projections, Goldman Sachs raised its year-end gold price target to $5,400/oz from $4,900/oz, citing strong demand from investors and central banks, coupled with the encouragement of portfolio diversification amid global policy uncertainty.
Meanwhile, silver fell sharply earlier in the session, but has since recovered to trade above $93/oz. Silver prices have also surged significantly over the past year, supported by tight supply and a surge in retail buying. In the latest update, gold fell to around $4,791.53/oz, while silver hovered around $93.15/oz; platinum and palladium also weakened, while the dollar index remained flat.
5 key points:
- Gold corrected after Trump withdrew the European tariff threat and mentioned the Greenland "framework."
- Prices fell from a record high of $4,888/oz, but gold still gained >4% on the week.
- Geopolitics and the issue of "weaponization" of commodities/supply chains remain supportive for gold.
- The Trump vs. Fed drama (the Lisa Cook case) adds uncertainty about the central bank's independence.
- Goldman Sachs raises its gold target to $5,400/oz; silver recovers above $93/oz despite taking a hit. (asd)
Source: Newsmaker.id
