Gold’s relentless charge: The market’s one true safe haven

Gold has once again stormed higher, smashing through $3,600 an ounce, leaving traders squinting at their screens as if the tape were glitching. But this is no bad tick—it’s the logical crescendo of a market where rate-cut wagers, political meddling, and creeping stagflation fears are converging into a perfect tailwind for bullion.

The metal has ripped 9% in the past three weeks and nearly 40% year-to-date, a performance that makes equity benchmarks look pedestrian and has left bondholders muttering about the futility of duration. Friday’s soggy labour print was the accelerant—weak enough to cement the view that Powell’s hand is forced into action. Now the street is fully pricing in a 25bp trim next week, with some desks leaning toward a jumbo 50bp. In trader shorthand: the real rate profile is heading negative again, and gold thrives when bonds can’t keep pace with inflation.

But it’s not just monetary arithmetic driving this melt-up. The political backdrop has turned gold into the ultimate protest asset. Trump’s tariff salvos have already juiced stagflation chatter, and his courtroom push to fire Fed governor Lisa Cook is cutting straight to the heart of central bank independence. Traders know this script—when faith in the Fed wobbles, gold becomes the one institution that doesn’t default, dilute, or lie.

Add in the fact that global central banks have been hoovering up bullion for years, to the point where gold now outranks the euro as a reserve asset, and you get a structural bid beneath the rally. Meanwhile, foreign investors are quietly rotating out of Treasuries, the dollar has dropped over 10% against peers this year, and the world’s most liquid safe haven looks increasingly tarnished. If Treasuries are suspect and the greenback is sliding, what’s left? The answer is already glowing on every trader’s PnL sheet.

Even the tariff confusion that briefly rattled the bullion market last month—when customs floated the idea that imported bars might be taxed—has been resolved in gold’s favour. The White House has now exempted bullion from those levies, removing the one oddball obstacle to physical flows into the U.S.

What we’re watching is not just a rally, but a repricing of trust itself. Gold isn’t yielding, innovating, or compounding. It’s simply absorbing the market’s collective disbelief in paper promises. At $3,600, it’s no longer just an inflation hedge; it’s a referendum on the system. And if the currents continue—negative real rates, stagflation risk, dollar erosion, and political assault on the Fed—the trajectory doesn’t end here. Traders who once scoffed at whispers of $5,000 are suddenly finding themselves rerunning the math, this time without irony.

Gold’s path higher: The Dollar’s slow unravelling

On the surface, the dollar looks deceptively steady. Despite the noise swirling around the Fed, the slide in front-end yields, and a weakening jobs pulse, the greenback hasn’t cracked. Equities are still outperforming global peers, tariffs appear to be absorbed better than feared, and relative fiscal messes abroad—from Paris to Westminster—have given some of the remaining dollar bulls just enough rope to argue the bear market is over.

But scratch beneath that veneer of resilience, and the picture darkens. The dollar’s supposed stability is more illusion than foundation. What the market is brushing aside is the very force that will keep gold’s rally alive: real yields collapsing while the Fed’s tolerance for inflation rises.

The Fed has quietly lowered the bar for cuts. With tariffs bleeding through to consumer prices, inflation is sticky, not transitory. That means market rates are headed lower while inflation refuses to follow suit—a one-two punch that historically saps the dollar’s strength and supercharges gold. Negative real rates are like rocket fuel for bullion.

Add to this the growth outlook. U.S. GDP is set to slow to barely 1% by late 2025, with only marginal improvement into 2026. Friday’s limp labor data already hints at stalled hiring. This doesn’t sound like an economy outpacing the world—it sounds like a patient sliding toward stagnation. Against that backdrop, the market has scope to price a deeper easing cycle, especially at the belly of the curve. Lower yields invite foreign investors to hedge away their dollar exposure, draining support for the currency while reinforcing flows into gold.

Meanwhile, policy divergence is working against the greenback. The ECB is in no rush to ease, and the Bank of England has even struck a hawkish tone. If the Fed is cutting while Europe and the UK hold back, the relative rate differential tilts decisively against the dollar. That’s another tailwind for bullion.

Layer on the governance risk. Trump’s public battle with the Fed, efforts to remake its board, and the gnawing sense that the world’s most important central bank is no longer fully insulated from politics—all chip away at the dollar’s premium as the globe’s reserve anchor. In moments like this, gold isn’t just an inflation hedge, it becomes an institutional hedge.

And while dollar skeptics love pointing to fiscal frailty in Europe and the UK, America is hardly immune. The debt trajectory, yawning deficits, and heavy Treasury issuance will keep term premium alive in U.S. markets, undermining the very bond market that has long supported the greenback’s reserve status.

When you string it all together, the case is clear. The dollar’s apparent resilience is a façade masking eroding real rates, sagging growth, dovish Fed leanings, and rising political interference. That mix is toxic for the greenback and electric for gold.

Gold doesn’t need the dollar to collapse—it just needs the illusion of its strength to fade. And that process has already begun.