Gold Climbs Above $5,000, "Debasement Trade" Grows Stronger
Gold continued to strengthen and held above $5,000/oz for a second day, driven by a weakening dollar and increasingly defensive investor sentiment. Safe-haven demand rose again as markets viewed geopolitical risks and policy uncertainty as lingering.
In the Asian session, spot gold rose about 1% to $5,065.07/oz, after setting a new record the previous day. Silver also went on the rampage, surging about 5.2% to $109.22/oz after hitting a record high the previous session.
The latest trigger came from the tariff war. US President Donald Trump threatened to raise tariffs on South Korean goods, after previously pressuring Canada with threats of large tariffs if Ottawa reached a trade deal with China. At the same time, the dollar weakened—making precious metals cheaper for global buyers.
This rally is also seen as a "debasement trade": investors are moving away from currencies and government bonds and investing in real assets like gold. Recent volatility in the Japanese bond market has reinforced the narrative that the market is increasingly sensitive to fiscal risks and policy direction.
The options market has also risen. Reuters noted that implied volatility in the gold market has returned to high levels, signaling that traders are bracing for increasingly volatile movements. Many market participants are choosing to "buy the correction" rather than buck the trend.
Looking ahead, the focus will be on the Fed meeting and rumors about Trump's choice for the next Fed chair. Amundi believes that increasing US "isolation" and question marks over Fed policy are prompting investors to reduce dollar assets and increase their use of gold as a hedge against purchasing power.
Key points (5):
- Gold holds above $5,000 as safe haven demand increases.
- The dollar weakens, helping the precious metal rally.
- Trump's tariff threats (Korea & Canada) add to uncertainty.
- The "debasement trade" is back in full swing: investors are moving away from bonds and currencies.
- The market awaits the Fed and the direction of its next leadership; Amundi sees a shift from the dollar to gold. (asd)
Source: Newsmaker.id
