Weaker dollar, fiscal concerns, and geopolitical tensions fuel one of the strongest runs since 2020
Precious metals surged to record levels this week, with gold climbing close to $5,000 per ounce and silver touching $100, marking one of the most dramatic rallies in decades. Gold is now up roughly 13% year-to-date and is on track for its best weekly performance since 2020, underscoring a powerful shift in global investor sentiment toward hard assets.
Strategists point to a combination of macroeconomic and geopolitical forces driving the move. A weakening US dollar, growing expectations for Federal Reserve easing, widening fiscal deficits, and diminishing appetite for government debt have all bolstered demand for bullion. Goldman Sachs noted that the rally is no longer driven solely by central banks, as private sector investors increasingly join the trade.
Concerns over US fiscal discipline have become a central theme. Ole Sloth Hansen, head of commodity strategy at Saxo Bank, described the moment bluntly, writing that “the cat is out of the bag,” as investors reassess long-term confidence in US assets. Earlier this week, a Danish pension fund announced plans to exit US Treasurys, while reports suggest other large Northern European investors are also reevaluating their exposure amid rising geopolitical tensions.
Silver has outperformed gold, surging nearly 29% year-to-date. Unlike gold, silver’s demand is heavily tied to industrial use, making supply constraints particularly impactful. China has been stockpiling silver for domestic consumption and restricting exports since the start of the year, further tightening global supply.
Still, caution is growing among analysts. JPMorgan warned that silver prices have already overshot forecasted averages, while Bloomberg strategist Mike McGlone drew parallels to the late 1970s, when a rapid surge was followed by a sharp collapse. While momentum could carry silver higher in the near term, history suggests volatility may soon return, potentially reshaping the precious metals landscape for years to come.
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