Port Harcourt — Gold continues to shine this week, surpassing the $3,300 per ounce mark amid a turbulent economic and financial landscape that paves the way for further gains. What we are witnessing is not merely a conventional rally, but rather a structural shift in how global markets perceive gold. This comes as confidence in the U.S. dollar fractures and fears of stagflation rise.
Breaking through this critical psychological and technical level has been driven by a confluence of interconnected factors, foremost among them the deterioration of the U.S. fiscal position and the downgrade of its sovereign credit rating by Moody’s. This dealt a blow to the credibility of U.S. public finances and intensified pressure on the dollar.
In my view, these developments are not temporary but reflect a long-term trend that is reshaping the balance of power in currency and precious metals markets. The Federal Reserve’s increasingly cautious and hesitant stance is also fueling this upward momentum.
With markets increasingly convinced that the Fed is more inclined to cut rates than tighten policy further, the dollar becomes less attractive as a yield-generating asset. Meanwhile, gold is gaining appeal as a non-yielding asset that draws its value from relative stability in times of uncertainty.
Comments from key Fed officials, such as Beth Hammack and Alberto Musalem, clearly point to genuine internal concerns about the future of the U.S. economy amid fragile fiscal and trade policies. When investors sense this internal concern, it often sparks a shift away from U.S. assets toward safer havens, chief among them, gold.
We also cannot ignore the role of the increasingly volatile geopolitical environment in supporting gold’s bullish trajectory. Renewed tensions between the U.S. and China—especially regarding semiconductors and advanced technologies—have resurrected the specter of a trade war that had faded from market consciousness in recent years.
With mutual accusations and China describing U.S. trade actions as “bullying,” the likelihood of broader conflict between the two economic powers is rising. At the same time, Middle East tensions are resurfacing, with U.S. intelligence reports suggesting a possible strike on Iranian nuclear facilities. In my opinion, these factors not only stir market anxiety but generate genuine demand for safe-haven assets—chiefly, gold.
Adding to the pressure on the dollar is former President Donald Trump’s push for a tax bill that could add $3 to $5 trillion to the national debt. This would further strain the already fragile U.S. financial system. Such expansionary fiscal policies—at a time when revenues are falling and expenditures are rising—make gold a logical hedge for investors, not an emotional one.
That is why I believe the move above $3,300 is not just a bullish correction, but the start of a new wave that reflects structural changes in the global financial system, with gold beginning to reclaim its role as a true store of value.
So far, even elevated U.S. Treasury yields have failed to suppress gold’s momentum, signalling a deep shift in investor sentiment. Typically, higher yields reduce gold’s appeal, but the current environment is different. Investors appear unconvinced that the Fed can tame inflation without triggering a recession, revealing weakening confidence in traditional monetary policy tools.
In such a climate, investors prefer gold despite its lack of yield—a strong sign that gold is increasingly seen as a strategic hedge against systemic financial deterioration, not just a speculative bet on short-term events.
Moreover, support from foreign central banks further strengthens this outlook. As major institutions like the People’s Bank of China and the Reserve Bank of Australia lean toward looser monetary policy, their demand for gold is increasing, whether as protection against the erosion of dollar reserves or for reasons tied to monetary sovereignty.
This official accumulation of gold, combined with private investment demand, creates a solid foundation for a prolonged bull cycle that could push prices to new record highs in the coming months. If current momentum continues, I expect gold could surpass $3,400—or even $3,500—before the end of Q3 this year.
In summary, the current landscape is redrawing the balance between the dollar and gold. The dollar’s decline is no longer just a price movement—it reflects eroding confidence in the U.S. economy and its ability to manage domestic and external crises.
In contrast, gold is in a strong position, backed by broad buying interest and a solid foundation of geopolitical risks, unsustainable fiscal policies, and declining efficacy of monetary tools. Against this backdrop, I believe gold is not just likely to hold above $3,300—it is well-positioned for further gains, making it one of the top-performing assets of 2025.
