Bullion prices breached the US$3,385 per ounce mark as the US currency depreciated to its lowest level since the early months of 2024. President Trump has openly considered the possibility of dismissing Federal Reserve Chair Jerome Powell while advocating for lower interest rates. This stance has drawn a sharp contrast with the views of figures like Austan Goolsbee, President of the Federal Reserve Bank of Chicago, who cautioned against any actions that could compromise the independence of the monetary authority.
Christopher Wong, a strategist at Oversea-Chinese Banking Corp., articulated the market's apprehension, stating, "Firing Powell not only undermines the principle of central-bank independence, but risks politicising US monetary policy in a way that markets will find unsettling." He further suggested that any erosion of the Fed's credibility could diminish confidence in the dollar, thereby accelerating the flow of investments into safe-haven assets, with gold being a primary beneficiary.
The price of gold has witnessed a remarkable ascent to successive record highs throughout the current year. This rally has been largely attributed to the uncertainty generated by the protracted trade conflict, which has dampened the appetite for riskier assets and simultaneously spurred a flight to safety. Supporting this trend, holdings in bullion-backed exchange-traded funds have seen an increase for the past twelve consecutive weeks, marking the longest such streak since 2022. Additionally, central banks globally have been actively increasing their gold reserves, indicating robust worldwide demand for the metal.
Adding to the climate of economic unease, China's Ministry of Commerce issued a warning, stating its opposition to any trade agreement reached at the expense of Beijing's interests. Investors are also keenly awaiting upcoming economic data this week, including revised forecasts from the International Monetary Fund, which could potentially reinforce existing concerns about a slowdown in global economic growth.
Reflecting the growing bullish sentiment surrounding gold, several financial institutions have become increasingly optimistic about its future prospects. Among them, Goldman Sachs Group has projected that gold prices could potentially reach $4,000 per ounce by the middle of the following year.
In the spot market, gold prices surged by as much as 1.8% to reach a high of $3,385.36 an ounce. By 11:33 am in Singapore (10:33 am Thai time), the metal was trading at $3,383.67. Concurrently, the Bloomberg Dollar Spot Index experienced a significant decline of 0.7%. In the broader precious metals market, silver managed to recover from an earlier dip to trade higher, platinum remained relatively stable, while palladium saw a decrease in price.