Pound, gold and oil prices in focus: commodity and currency check, 13 June

Gold (GC=F)

Gold prices surged to their highest level in nearly two months on Friday, lifted by heightened geopolitical tensions following Israeli airstrikes on Iran. The escalation in the Middle East conflict spurred demand for traditional safe-haven assets, putting bullion on track for a weekly gain.

Gold futures gained nearly 1% to $3,435.20 per ounce at the time of writing, while the spot gold price advanced 2% to $3,414.79 per ounce.

“The geopolitical escalation adds another layer of uncertainty to already fragile sentiment,” said Charu Chanana, chief investment strategist at Saxo.

The Israeli government declared a state of emergency, warning of imminent missile and drone attacks from Iran. Meanwhile, the US military is reportedly preparing for a range of scenarios, including potential evacuations of American civilians from the region, a US official told Reuters.

“This latest spike in hostilities in the Middle East has taken the focus off trade negotiations for now, with investors making a play towards safe-haven assets in response,” said Tim Waterer, chief market analyst at KCM Trade.

“Gold surged past resistance around $3,400 on news of the airstrikes, and further upside could be in-store should the escalation continue,” he added.

The rally in gold has been further underpinned by growing expectations of monetary policy easing in the US. Recent data showing elevated jobless claims and muted producer price inflation have increased speculation that the Federal Reserve could cut interest rates, making non-yielding assets such as gold more attractive to investors.

Oil (BZ=F, CL=F)

Oil prices rose at the fastest pace in over three years on Friday amid concerns that Israeli military strikes on Iran could trigger a wider conflict in the Middle East, threatening global energy supplies and stoking inflation.

Brent crude futures (BZ=F) climbed 5% to $71.92 a barrel, at the time of writing, while West Texas Intermediate futures (CL=F) rose by the same margin to $71.44 a barrel.

The market reaction reflects growing unease that a broader confrontation could disrupt flows through the Strait of Hormuz, a vital maritime chokepoint through which roughly a fifth of global oil supply is transported. While Iran exports around 1.6 million barrels of oil per day, any move to block or restrict traffic through the strait could have far-reaching consequences for global energy markets.

Warren Patterson, an analyst at ING (ING), said: “We are back in an environment of heightened geopolitical uncertainty, leaving the oil market on tenterhooks and requiring it to start pricing in a larger risk premium for any potential supply disruptions.”

Iran, one of the world’s leading oil producers, sells the majority of its crude to China, which consumes approximately 15% of global oil demand.

Priyanka Sachdeva, an analyst at Phillip Nova, said: “Iran has announced an emergency and is preparing to retaliate, which raises the risk of not just disruptions but of contagion in other neighbouring oil producing nations too.

“Although Trump has shown reluctance to participate, US involvement could further raise concerns.”

US secretary of State Marco Rubio on Thursday called Israel’s strikes against Iran a “unilateral action” and said Washington was not involved, while also urging Tehran not to target US interests or personnel in the region.

MST Marquee senior energy analyst Saul Kavonic said the conflict would need to escalate to the point of Iranian retaliation on oil infrastructure in the region before oil supply is materially impacted.

Pound (GBPUSD=X, GBPEUR=X)

The pound was lower against a stronger dollar, slipping 0.4% to $1.3558, amid a global selloff sparked by Israeli strikes on Iran.

The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, rose 0.3% to $98.19, bolstered by safe-haven demand.

“Full-scale war in the Middle East moves another step closer,” says Tatha Ghose, an analyst at Commerzbank (CBK.DE). “Until the danger of further escalation has passed, safe assets are likely to remain in demand.”

In other currency moves, the pound was muted against the euro (GBPEUR=X), trading at €1.1744 at the time of writing.

More broadly, the FTSE 100 (^FTSE) was down, losing 0.6% to 8,834 points at the time writing. For more details, check our live coverage here.

Read the full article HERE

The dollar has sunk to its lowest in three years as rapidly changing U.S. trade policy unsettles markets and expectations build for Federal Reserve rate cuts, fuelling outflows from the world’s biggest economy.

With the dollar down almost 10% against a basket of major currencies this year, other countries around the globe are grappling with unanticipated FX moves that are having a knock-on impact on economic growth and inflation.

“There’s clearly solid dollar selling,” said Kit Juckes, chief FX strategist at Societe Generale.

Here’s a look at some of the biggest movers:

1/ CROWN JEWELS

Scandinavia’s currencies are the standout performers against the dollar so far in 2025. The Swedish crown is up 14%, its best performance at this point in the year against the U.S. currency in at least 50 years. Norway’s crown is up nearly 12%, its best run since 2008.

Highlighting just how much of this strength stems from dollar weakness, Sweden’s crown is up only 4% against the euro and Norway’s just 1.8%.

Sweden is expected to cut rates this month as inflation and its economy slow, yet its currency shows no signs of weakening. In Norway, lower oil prices often temper the crown, but that dynamic has also been upended by its relationship with the dollar.

2/ SAFE-HAVEN WOES

The euro, Swiss franc and Japanese yen are also among the biggest beneficiaries of the dollar’s fall from grace, up roughly 10% each so far this year.

But this comes at a price.

Swiss inflation turned negative in May, marking the first decline in consumer prices for more than four years. The surge in the franc reduces the price of imported goods, and piles pressure on the central bank to cut rates back below 0%.

European Central Bank rate setters will also have a wary eye on the single currency, which at around $1.1572 is at its highest since 2021.

“In my heart-of-hearts we are going to get to $1.20 but we shouldn’t get there too fast because it’s deflationary,” said SocGen’s Juckes.

Even after the recent surge, the yen remains down almost 30% from end-2020 levels, leaving Japan to try to balance the negatives of a stronger currency with the need to demonstrate in trade talks with Washington that it is not seeking an unfair advantage from its longer-term weakness.

3/ FACTORY ASIA

For years, Asian investors parked trillions of dollars in U.S. assets such as Treasuries. U.S. President Donald Trump’s April 2 “Liberation Day” fired the starting gun for that capital to start flowing back to the world’s manufacturing powerhouses, boosting their currencies.

Taiwan’s dollar surged 10% over two days in May and is up nearly 12% this year, while the Korean won has gained around 10%.

Singapore’s dollar, Malaysia’s ringgit and Thailand’s baht are all up 6% too, but China’s yuan – arguably the most exposed to tariffs – has only appreciated by about 2% offshore, hemmed in by the central bank’s guardrails around its onshore counterpart.

China wasn’t labelled a manipulator in the U.S. Treasury’s latest currency report, but the lag in the yuan will not have gone unnoticed in Washington.

4/ OUTLIER

Argentina’s peso is an outlier, down around 15% against the dollar and one of this year’s weakest performers.

The reasons are domestic with the introduction of a new exchange rate regime in April allowing the peso to float freely within a gradually expanding band that started between 1,000-1,400 pesos per dollar.

Still, the chaotic crash feared by some has been avoided and a recent $20 billion loan agreement with the IMF is positive.

In contrast, Mexico’s peso, which was under particular pressure at the start of the year from U.S. trade policy, has bounced back to near its strongest levels since August. While it could gain further if tariff spats are resolved, it is also sensitive to the U.S. economic outlook.

5/ STERLING

Softer data has raised the prospect of Bank of England rate cuts and capped sterling’s recent rally to more than three-year highs against the dollar.

The pound is up almost 9% this year and analysts say foreign buyers may be rushing to snap up UK Plc before any further dollar weakness makes future transactions more expensive.

More than $10 billion in bids for British companies were announced on Monday, this year’s busiest day, according to Dealogic data.

Analysts do, however, expect sterling to underperform other major currencies bar the dollar, given fiscal worries and weakening growth.

“Sterling is less appealing than others (currencies) and the macro risks are elevated,” said Lloyds FX strategist Nick Kennedy.

Read the full article HERE.

Record-high purchases and a blistering rally in prices has seen gold overtake the euro as the second-largest asset in the reserves of the world’s central banks.

The share of gold in global foreign reserves at market prices reached 20% at the end of 2024, surpassing the euro at 16%, the European Central Bank said in an annual assessment of the currency’s international standing. The US dollar extended a steady decline to reach 46% of global reserves.

Gold’s dizzying rise — prices have doubled since late 2022 — has been fueled in part by central bank purchases. Sovereign institutions have bought more than 1,000 tons a-year for the past three year, twice as fast as their average pace of purchases prior to 2022. Their holdings are now back at levels last seen in the late 1970s.

“Gold demand for monetary reserves surged sharply in the wake of Russia’s full-scale invasion of Ukraine in 2022 and has remained high,” the ECB wrote in the report.

The freezing of Russia’s foreign exchange reserves held in Group of Seven currencies after its invasion of Ukraine spurred some banks to reduce exposure to the Western financial system, as did the threat of inflation and speculation that the US would treat foreign creditors less favorably.

Gold prices and real yields have historically had a negative correlation, as higher returns tempt investors away from bullion, which doesn’t bear interest. This relationship broke down in 2022, as central banks began to buy the yellow metal as insulation from sanctions risk, in spite of interest rates rising globally, the ECB report added.

“Countries that are geopolitically close to China and Russia have seen more marked increases in the share of gold in their official foreign reserves since the last quarter of 2021,” the ECB economists wrote.

Read the full article HERE.

This year’s rise for both the metal and the stock index tells a story of ‘conflicting narratives’

The S&P 500 and gold are both within striking distance of all-time highs — a rare event that leaves investors wondering what exactly is going on.

After all, stocks at all-time highs indicate that investors are optimistic about the future and happy to pile into risky assets. Gold, meanwhile, is often viewed as a safe haven — a port in the storm during periods of uncertainty.

“It’s like watching someone eat salad and dessert at the same time,” said Adam Koos, president and senior financial adviser at Libertas Wealth Management Group. “Investors are trying to be ‘healthy’ but still hedging against what might come later.”

‘It’s like watching someone eat salad and dessert at the same time. Investors are trying to be “healthy” but still bill still hedging against what might come later.’

— Adam Koos, Libertas Wealth Management

It is possible for both the S&P 500 and gold to hit, and hold, record highs at the same time, but “it’s not exactly the norm,” he said. When it does happen, it’s usually “under a specific set of conditions that reflect a combination of optimism and anxiety in the markets.”

This year’s rise for both tells a story of “conflicting narratives,” Koos said. “The stock market is pricing in a soft landing with [artificial-intelligence] fueled earnings growth, while gold is pricing in longer-term structural concerns” such as runaway deficits, a weakening dollar or even central-bank demand from countries hedging U.S. exposure.

Traditionally, the S&P 500 

SPX+0.08% and gold 

GC00-0.29% are “somewhat inversely correlated,” he said. When they rise together, it often “points to a deeper undercurrent,” such as fear around inflation, a weakening dollar or expectations that the Federal Reserve might start easing interest rates.

Both gold and the S&P 500 have been moving higher so far this year, though the metal has far outpaced the rise for the index.

As of Monday, gold futures were up nearly 27% in the year to date and sitting just 2.1% below the record high set on April 21, according to Dow Jones Market Data. The S&P 500 is up only 2.1% this year but has roared back from the steep selloff that followed President Donald Trump’s unveiling of sweeping tariff measures on April 2. The S&P 500 as of Friday was just about 2.3% below its record finish, scored on Feb. 19.

“The rare positive correlation between gold and the index, which historically tend not to peak together, may have been fueled by dovish Fed expectations and fiscal as well as structural concerns,” said Dina Ting, head of global index portfolio management at Franklin Templeton.

The S&P 500 index and gold futures had reached respective record highs at the same time earlier this year, on Feb. 18, with the index marking a record close at the time of 6,129.58 and gold settling at $2,949.

Tandem move

Equities tend to respond to growth-related factors like earnings and interest rates, while gold prices tend to move on more fear-related factors like inflation expectations or debt levels, said Keith Weiner, chief executive officer of Monetary Metals.

Right now, we seem to be in a period where both sets of forces are “elevated,” he said. Optimism is driving equity markets higher, while underlying fears are supporting record demand for gold” and investors are “positioning for both potential outcomes by continuing to buy stocks for growth and gold for stability.”

To see the precious metal and the index move in tandem is a break from the norm, but it’s not surprising to see, said Harley Kaplan, an independent financial advisor in Plymouth, Mass.

“Investments can be emotion driven and presently, there is a lot of risk in the world,” he said. Gold has always provided security against turmoil, while investors in equities invest for tomorrow — “showing confidence in the future.”

Ratio ‘elevated but not extreme’

Meanwhile, the ratio between gold and S&P 500, which represents how many ounces of the metal are required to buy the index, appears to have rebounded since narrowing and is “elevated but not extreme,” said Franklin Templeton’s Ting.

“That suggests confidence in equities, but not an outright dismissal of gold,” she told MarketWatch. “The significance here is it’s signaling a reversion to more traditional dynamics.”

At roughly 1.76, the ratio currently favors gold, Koos said. It had fallen to around 1.5 back in April, according to a chart provided by Libertas Wealth Management.

When the ratio falls, gold is the relative outperformer, which likely means that investors are “shifting toward safety or bracing for volatility,” he said. When the ratio is moving up, the bulls — and momentum and strength — are in the hands of the S&P 500, he said.

That said, although it’s rare, the index and gold could reach record highs simultaneously again, said Koos.

For that to be sustainable, however, there would likely need to be a combination of falling real interest rates or dovish Fed policy, ongoing demand for hard assets — such as central banks buying gold — continued belief in long-term growth that would support equities and “enough macro uncertainty to keep fear trades alive,” he said.

“It’s a fragile dance,” Koos said, likening such a situation to watching “someone balancing two spinning plates.” It’s possible for a while, he said, but it “takes constant motion and the right conditions to keep both from falling.”

Companies are freezing hiring and investment to deal with shifting tariff policies. ‘Even Trump doesn’t know what Trump will do next.’

Key Points

The U.S. economy, which weathered false recession alarms in 2023 and 2024, is entering another uncomfortable summer.

Job growth held steady in May, with the economy adding 139,000 jobs. The unemployment rate has stayed in a tight range, between 4% and 4.2%, over the past year.

But there are cracks beneath the surface. Businesses are warning that constantly shifting trade policies are interfering with their ability to plan for the future, leading to hiring and investment freezes. 

Policy uncertainty has unfolded against the backdrop of an economy with slower job growth and a cooling housing market. Compared with last year, the Federal Reserve is more reluctant to cut interest rates because officials are worried about new inflation risks.

John Starr, the owner of UltraSource, an importer and manufacturer of meat-processing technology in Kansas City, Mo., said he is hunkering down—no hiring, no more capital spending—until he has clarity on tariffs.

The company is waiting for suppliers in Europe to finish work on $20 million in orders it placed before 10% tariffs took effect on April 9. That means he faces a $2 million levy if tariffs stay at that level.

“How am I supposed to pay this?” said Starr, a third-generation owner of the company. “That could wipe out profits for a year.”

Whether the economy again bends, rather than breaks, turns on how the U.S. consumer handles the latest curveball—this time from President Trump’s desire to reorder America’s trading relationships and reduce reliance on imported goods. For months, the president has announced one large tariff increase after another, at times wavering from escalation to temporary resolution.

“Where this goes all depends on what Trump decides to do next, and candidly, even Trump doesn’t know what Trump will do next,” said Christopher Thornberg, founding partner at Beacon Economics in Los Angeles. “So it’s almost impossible to see where this thing is heading.”

Economists largely agree that for the U.S. economy to slide into recession, the American consumer needs to falter.

“As long as the consumer is doing OK, it’s not going to change our world,” said Ric Campo, chief executive of Camden Property Trust, a Houston-based developer and owner of 58,000 apartment homes.

Most economists think the prospects of a recession are higher than they were at the beginning of the year but lower than in April and early May, when tariffs on China had been increased by 145%.

The U.S. agreed to roll back the tariff increase to 30% last month. Most other nations face 10% tariff increases, with higher rates on dozens of countries paused until early July.

Three risks loom large.

• First, the U.S. labor market has been in an uneasy equilibrium where companies aren’t hiring but are reluctant to fire workers that they hustled to find three or four years ago. Like a beach ball that shoots skyward after being held underwater, joblessness can quickly jump once companies decide demand is too soft to keep those workers.

“It starts with one large firm. Then competitors might say, ‘Well, listen, we have to do the same,’ ” said Gregory Daco, chief economist at consulting firm EY.

Bill Hutton, president of Titan Steel, a Baltimore-based distributor and processor of mostly imported steel for products such as paint cans, said he is going to “err on the side of caution” when it comes to reducing the size of his workforce. Having worked so hard to staff up, he said, he is “very, very leery of making assumptions that, ‘Oh, we can dial up or down our workforce at a moment’s notice.’ ”

• Second, consumers could finally push back against rising costs, forcing companies to tighten their belts.

Delinquency rates on consumer debt have been on the rise for a year, raising fears that deteriorating finances for low-income borrowers could lead to a more pronounced slowdown in consumer spending.

For the housing market, the spring sales season has been a bust. The U.S. market now has nearly 500,000 more sellers than buyers, according to real-estate brokerage Redfin. That is the largest gap since its tally began in 2013. Home prices could fall 1% this year, said Redfin economist Chen Zhao.

“The market has been at rock bottom for the last 2½ years and there was some hope that we’d get a little bit of a turnaround this year. And it’s just actually been worse than expected,” said Zhao.

• Third, financial-market shocks or abrupt sentiment changes remain a wild card. The Fed reduced short-term interest rates by 1 percentage point last year, providing a measure of relief to borrowers with credit cards or variable-rate bank loans.

Officials hit pause on rate cuts this year amid concerns that tariffs might create new inflation risks. Longer-term borrowing rates, which aren’t set by the Fed and which influence many borrowing costs such as mortgages, have been elevated as investors around the world pay more attention to how governments will finance rising deficits in the years to come.

Any sudden and sustained rise in borrowing costs could spill over to the stock market, hurting companies’ earnings and making stocks less attractive. Lofty asset prices have supported business investment and high-income consumer spending.

For many companies, the uncertainty triggered by Trump’s sudden and seemingly arbitrary announcements of tariffs has upended the outlook for sales this year.

Starr, at UltraSource, orders equipment that has a lead time measured in months. Because those products are made to each customer’s specifications, Starr can’t resell them if clients refuse to eat the cost of the tariff. 

“I have to take action now,” Starr said. “We’re going to be very careful about any cash expenditure just because we need that cash to pay the tariff.”

White House officials have said they are confident the president’s approach will lead to better trading relationships. “In order to get another country to eat the burden of the tariffs, we have to have a credible threat to move our supply chains across the border…It can take some time to make that threat credible,” Stephen Miran, chairman of the president’s Council of Economic Advisers, said in an interview.

Miran said he couldn’t produce a forecast for inflation this year because “we’re still waiting for policy details to be fully fleshed out right now.” He also said businesses would benefit from a tax-cut package moving through Congress.

Starr, who said he has already racked up $300,000 in unanticipated expenses because of tariffs, said the prospect of business tax cuts is of little use if his profits are zeroed out from tariffs. He said he doesn’t object to paying a 20% tariff on prospective orders as long as he has certainty the duty won’t suddenly change after he has negotiated purchase orders with customers and vendors.

Steel and aluminum tariffs, which Trump this past week raised to 50% from 25%, could boost domestic metal producers while squeezing profits for carmakers, can manufacturers, and companies such as Titan Steel. Hutton, the steel company’s president, said customers have been understanding about accepting some price increases because his competitors have also had to raise prices.

“It feels like we’re muddling through,” he said. “Nobody—neither us, nor our customers, nor our overseas supplier—is in any position to do any long-term thinking.”

The Fed aggressively raised rates in 2022 and 2023 to combat inflation. But the U.S. economy was insulated because many households and businesses had already refinanced at ultralow rates during the pandemic. Later, the economy benefited from an unexpected boom in capital spending on artificial intelligence.

Any pullback could be abrupt. “It’s very rare that you have a technology shock of this sort that doesn’t lead to overbuilding,” said Jason Thomas, chief economist at private-equity manager Carlyle Group.

Some companies have held back from raising prices now until they can see how tariffs settle out. “They just said, ‘We cannot take the risk of souring relations with our customers, with our suppliers, over a policy that in two months’ time may not even be in place,’” Thomas said.

He expects businesses eventually will have to pass along some cost increases, however, because they will have depleted inventories acquired at pretariff rates.

One tailwind—recent declines in energy prices—could help offset some of the inflationary impulses from tariffs. 

While the president often gets undue credit for what goes right or wrong in the economy, this time could be an exception.

“The economy has a lot of momentum, and so if Trump truly backs off on tariffs and just calms down, you could see this expansion going another two, three years, honestly,” said Thornberg of Beacon Economics. “Then again, if he keeps rocking the boat, you can blow it up by the beginning of next year.”

Read the full article HERE.

Get critical insights on RISING gold and silver prices. Learn how both metals have evolved, how PRICE PERCEPTIONS have changed, and how HIGH PROFITS could actually go.

Silver extended gains to 13-year highs and platinum reached the highest since early 2022, signaling growing investor appetite for precious metals used in key industries.

Spot prices for both metals continued to rally on Friday after spikes of more than 4% in the previous session. Gold edged higher at a slower pace.

The metals were aided by technical momentum as well as improving fundamentals, with a strong appetite for physical silver in India and resurgent Chinese platinum demand reinforcing the rallies, according to a note by Nicky Shiels, head of metals strategy at Geneva-based MKS PAMP SA.

Silver and platinum tend to trade in tandem with gold, which is seen as a haven in times of geopolitical uncertainty. Gold is up 28% this year as an expanding US-led tariff war boosted its safety appeal and central banks maintained elevated levels of buying.

Silver and platinum had been lagging behind, but they are now catching up, with year-to-date gains of 25% and 28%, respectively. Both are driven by the ebbs and flows of industrial demand.

Silver is a key input into photovoltaic solar panels, while platinum is used in catalytic converters in combustion engines and laboratory equipment. Both markets are heading for a deficit this year, following several years where demand outstripped supply.

Holding above $35 an ounce remains a “critical inflection point” for silver and, if sustained, should reignite retail interest, Shiels said. Meanwhile, a potential renewal in demand for platinum-backed exchange-traded funds could produce a speculative rally, given sticky and elevated lease rates indicate the market is tightening, she said.

Platinum ETF holdings are showing signs of picking up, and have expanded more than 3% since mid-May, according to data compiled by Bloomberg. Inflows into silver-backed ETFs have continued to grow since early February, with holdings up 8%.

Palladium also benefited from growing positive sentiment across the precious metals complex, climbing as much as 2% on Friday.

Spot silver rose 1.6% to $36.22 an ounce as of 9:50 a.m. in London. Platinum gained 2.1%, while gold edged 0.4% higher. The Bloomberg Dollar Spot Index was little changed.

Investors are looking ahead to a key US jobs report due later on Friday, following an unexpected jump in unemployment claims that boosted bets the Federal Reserve will cut rates at least twice this year. Lower borrowing costs tend to benefit gold and other precious metals, as they don’t pay interest.

Read the full article HERE.

Gold held its ground on Thursday as investors looked forward to U.S. non-farm payrolls data due later this week to assess the U.S. interest rate path, while silver prices rose above the key $35 per ounce level for the first time since October 2012.

“I would say that the path of least resistance remains to the upside, despite today’s sort of flat mode for gold trading. But I think this is more due to traders being in wait-and-see mode ahead of non-farm payrolls,” said Ricardo Evangelista, senior analyst at brokerage firm ActivTrades.

Wednesday’s ADP National Employment Report revealed U.S. private payrolls increased far less than expected in May. U.S. President Donald Trump on Wednesday called for Fed Chair Jerome Powell to lower interest rates.

“I think that a weakening in the U.S. labor market will increase bets on a dovish Fed, so on the Fed cutting interest rates, (which) would be positive for gold,” Evangelista added.

Gold, a safe-haven asset during times of political and economic uncertainty, tends to thrive in a low-interest-rate environment.

Meanwhile, spot silver jumped 2.5% to $35.83 per ounce, its highest level since February 2012.

Silver’s “recent underperformance against gold because of economic concerns, given that 70% of silver usage is industrial, it looks that there could be some ratio trading going on now that it has dipped below the 100 level,” StoneX analyst Rhona O’Connell said.

The gold-silver ratio, denoting how many ounces of silver one ounce of gold can buy, is used by the market to gauge future trends as it indicates silver’s current performance against its historical correlation with gold.

Platinum rose 3.6% to $1,123.88, its highest level since March 2022, and palladium was up 1.8% at $1,018.38.

“Tangible assets with limited supply such as gold, silver, platinum and copper should be part of a broad portfolio in order to mitigate any economic fallout from geopolitical events, government mismanagement of debt and rising inflation threat” said Ole Hansen, head of commodity strategy at Saxo Bank.

Trump on Wednesday said the nation’s debt ceiling should be eliminated, saying he agreed with Democratic Senator Elizabeth Warren’s view on the subject.

Read the full article HERE.

If the US dollar is no longer a cast-iron reserve asset, then where can you turn? 

The remonetisation of gold

When I last wrote about gold about six weeks ago, I noted that it could probably do with a breather, having burst through the $3,300 an ounce level.

It promptly went on to $3,400 an ounce — twice — then went back down to below $3,200 as investors grew a bit more optimistic about the staying power of Trump’s tariffs, what with him doing a deal with the UK.

However, gold has since rebounded pretty sharply and looks like it may challenge $3,400 again. This cannot yet be described as a breather or a lull.

So what’s going on now? There’s a bit of US dollar weakness in there — the dollar had a bit of a rally in early May but (as measured by the Bloomberg dollar spot index) is now near the weakest it’s been since 2023.

But it’s not just dollar weakness. Silver, gold miners, and platinum (a precious, but not monetary, metal) have all started to play catch-up with gold in the last month or so. If anything, it feels as if the theme is broadening out, rather than calming down.

When the Covid-era inflation peaked around 2022 and central banks were furiously jacking up interest rates, slamming the stable doors shut while the horses galloped gaily around the paddocks, theory suggested that the good times were over for gold.

Gold doesn’t like rising “real” interest rates, was the basic argument, and one that had been a decent explanation for gold’s behaviour throughout the post-2008 period.

However, that’s not really what happened. Gold did hit a bottom in 2022, but it had a pretty punchy 2023, and then a stellar 2024, which has basically carried on into 2025. This is not because retail investors have been piling in.

Gold is Becoming a Vital Reserve Asset Again

No, the main culprit then — and as it turns out, now — appears to be central banks. Analysts at Goldman Sachs Group Inc. reckon they are buying about 80 metric tons of the stuff every month, mostly in secret (for more, see this Bloomberg report).

Why? Here’s a quote from the same piece that sums it up. “Gold is the safest reserve asset,” said Adam Glapinski, governor of the National Bank of Poland. “It is free from direct links to the economic policy of any country, resistant to crises and retains its real value in the long term.”

The idea of gold regaining its place as not just a respectable, but a desirable, reserve asset among central banks is a shift. And it’s an understandable one.

The US dollar standard replaced the gold standard because it had the advantage of being reliable. Broadly speaking, the US made the rules, but it would treat all dollar users in the same way.

That has changed. Use of and access to the US dollar system is now contingent on a number of things, the most obvious of which is, you can’t be an enemy of the US. The overt weaponization of the US dollar is a relatively recent phenomenon which became far more obvious with Russia’s invasion of Ukraine.

The problem is, it’s not just US enemies who need to be wary. Under Donald Trump, the US is also taking its allies to task. Issuing the world’s reserve currency might be an “exorbitant privilege” but it’s not cost-free, and as far as Trump’s concerned, it’s time to call in the bill.

Increasingly, US political policy seems to be similar to the business strategy of a maturing tech company. Having built a network of customers by offering a decent service at a negligible or non-existent price, it’s putting up its subscription fee on the assumption that there is no other alternative. That’s a bold bet, to put it one way.

Gold: “Hot But Not Red Hot”

Note by the way that the quote above is from the central bank of Poland. It’s not a major world central bank, but nor is it the central bank of a country which is ever likely to find itself on the wrong side of the global world order (not the current one, anyway).

It’s just another sign that the concern about how welcome foreign capital is in the US, is real. And that’s before we see whether the latest “revenge tax” passes the Senate or not.

Charlie Morris at ByteTree tends to be my first port of call for a sober yet non-sceptical voice on all things precious metal and crypto related. As far as he’s concerned (or at least was two weeks ago when his most recent gold report came out), gold is “hot but not red hot”.

“This will be over when gold is widely owned by investors, budgets are balanced, and there is an outbreak of geopolitical stability.” So not any day soon, it appears.

Read the full article HERE.

President Donald Trump’s rapid tariff rollout has slowed U.S. imports to a trickle, weighed on global growth prospects, and rekindled inflation concerns.

It has also, in part, led to the worst start to the year for the U.S. dollar on record, according to Dow Jones Market Data.

The 8.4% slump over the first five months of the year, in fact, has the U.S. dollar index which tracks the greenback against a basket of six global currencies, trading near to the lowest levels since the spring of 2022.

Bank of America calls foreign exchange rates the most important price in an open economy, noting they act as both an asset class as well as a “powerful transmission mechanism of macro policies.”

The signal currently emanating from that particular tower, however, has the potential to undermine the greenback even further.

Buried deep within the federal tax and spending bill passed last week by House lawmakers and currently being marked-up by the Senate, is section 899. Dubbed the “revenge tax,” the new rule would allow the government to apply new taxes on foreign investment from countries deemed to have unfair or discriminatory tax schedules of their own.

That could put investors from Europe, for example, at risk of having to pay extra fees when repatriating capital gains, dividends, or U.S. Treasury bond coupon payments. Europe’s digital services taxes on U.S. tech giants has been a keen focus of the Trump administration’s ire and an oft-cited example of the bloc’s non-tariff barriers.

“This potential power play against foreign holdings of US-based assets could eventually slow interest in recycling surpluses into U.S. capital markets,” said John Hardy, global head of macro strategy at Saxo Bank. “That’s obviously dollar-negative in flow terms on major players looking for alternatives to U.S. assets.”

Some of those players are already on the move. The euro, the heaviest weight against the dollar in global foreign exchange markets, is up 11% against the greenback this year. That is despite a much weaker economy and a central bank that has cut rates twice this year, and will likely do so again Thursday in Frankfurt.

Japan’s yen +0.83%, which pays virtually no interest on short-term investments, has gained 9%. The British poundGBPUSD-0.33%, despite Bank of England rate cuts and a slowing economy, is up 8%.

Trump’s latest moves on tariffs, which include a steepened 50% levy on steel and aluminum imports and a fresh attack on China’s alleged violation of a trade truce reached in Geneva last month, are also heaping renewed pressure on the bruised greenback.

“A shift to a more confrontational stance on trade between the U.S. and China (and) any early end to the deal, which lasts until Aug. 12, would hit risk assets and the dollar again,” said ING’s global head of markets Chris Turner.

U.S. exporters might enjoy the added advantage of a weaker dollar, and companies with overseas profits will find them cheaper to repatriate as the greenback slides. But the broader effect could be chilling.

America’s global trade deficit is also responsible for attracting billions in domestic investment from overseas, driving stock prices higher, Treasury bond yields lower and providing longer-term support for the greenback.

And when the country’s fiscal position is weakening and its overall debt levels are forecast by the Congressional Budget Office to top $50 trillion by the middle of the next decade, keeping those investments flowing is crucial.

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