Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
Gold blew past $3,200 an ounce last week as economic volatility spiked amid an all-out trade war. A sharp decline in US treasuries, the dollar, and stock indices triggered recession concerns, with many experts warning that the odds are rising. This shift reflects a broader transition from dollar-backed assets into safe havens as uncertainty soars.
The Comeback Candle
Following the surprise announcement of worldwide tariffs on April 2, gold plunged below the $3,000 barrier. This dip was short-lived as the specter of a protracted trade war elevated the yellow metal’s appeal. Within a week, gold prices clawed back lost gains and reached a new high of $3,329 an ounce just today.
That marks around a 7% gain since the $3,000 milestone, underscoring the rally’s momentum. Many experts are already increasing their 2025 gold price predictions, with some even saying $4,000 is reachable.
Caught in Economic Crossfire
Trump’s thunderous opening salvo to the fresh trade war stunned markets, spurring a widespread market sell-off, cutting the dollar to a multi-year low, and weakening bond markets. Although the administration rolled back some of its “reciprocal” tariffs, a blanket 10% import tax on global goods and an aggressive economic standoff with China remain.
The government has received harsh criticism from both sides of the aisle for its flip-flopping tariff policy, which has left consumers, businesses, and investors at a standstill. With no clear end in sight and threats of expanded tariffs, the world is looking for a more secure place to store its wealth, shunning dollar-linked assets.
The Foundation of Gold’s Climb
While the trade war fallout pushed prices past $3,200 last week, a slew of macroeconomic and geopolitical variables underpin gold’s sustained rally:
- Central Bank Buying – Governments have been the primary catalyst for gold’s shocking rise, buying up more than 1,000 tons for the past three years straight.
- Fed Rate Cuts – The Federal Reserve’s upcoming rate cuts (although slowed by sticky inflation) may increase the appeal of gold as yielding assets offer less return.
- Geopolitical Instability – Markets may dominate the headlines, but two ongoing wars continue to destabilize the world order, accelerating the global shift toward gold
- Retail Interest – Central banks have led the gold buying spree in terms of tonnage and timeline, but retail investors are ramping up their purchases as the economy nosedives.
Recession Fears Grow
Recession fears have possessed a recently thriving economy as GDP forecasts slip, consumer spending halts, and inflation lingers. A recent survey found that over 60% of CEOs expect an economic slowdown or full-blown recession. In March, the New York Fed estimated the probability of a recession at over 30%.
Ray Dalio, famed billionaire investor and founder of Bridgewater Associates, recently warned of “something worse than a recession” if the administration doesn’t alter its course.
“The Favored Safe-Haven Asset”
Instability at home is sending shockwaves through the global economy. As the USD gets weaker and more weaponized, it has become the target of a broad de-dollarization push. With trust in the world’s reserve currency fading, gold is increasingly viewed as the preferred alternative by governments and individual investors alike.
Trump’s trade negotiations nudge the dollar closer to a potential collapse. Nitesh Shah, Wisdom Tree’s commodities strategist, sums it up:
“Gold is clearly seen as the favored safe-haven asset. The US dollar has depreciated, and US Treasuries are selling off hard, as faith in the US as a reliable trading partner has diminished.”