Ediger Bourg, a co-founder of Key Advisor Wealth Management, describes bonds as “dead money” amid the backdrop of rising gold prices reaching new highs.
On Thursday, gold prices slipped, marking a pause in a record-setting rally that had seen precious metals soar in value over the past year. Traditionally, gold is viewed as a safe haven asset during times of economic uncertainty, and its value has risen as investors grapple with concerns about the US economy—especially with tariff effects on inflation and the potential for a weakening labor market that could lead to cuts from the Federal Reserve.
For instance, an investor who purchased a one-ounce gold bar at Costco last year for $2,495 would find that same bar valued at approximately $3,557 now, representing a hefty increase of around 42%—that’s more than $1,000 in just a year.
This week, spot gold prices surged to a historical peak of $3,578 on Wednesday, buoyed by a more favorable market outlook regarding Federal Reserve rate reductions. Furthermore, new data released on Thursday indicated an unexpected rise in the number of Americans filing for unemployment benefits.
The excitement around gold began to wane, particularly after former President Trump clarified that tariffs wouldn’t impact bullion imports. David Megger, Metal Trading Director at Highridge Futures, noted, “The Fed rate reduction has already been largely priced in, so each monthly job report will be watched closely.” There’s been significant capital flooding into the market recently.
Officials from the Federal Reserve discussed on Wednesday that worries about the labor market’s strength could facilitate rate cuts, especially as inflation continues to exceed the Fed’s long-term target of 2%.
Standard Chartered anticipates further increases in gold prices due to rising demand for safe assets, fueled by growing uncertainties tied to tariff policies and concerns over Fed independence.
In political circles, President Trump has taken aim at Federal Governor Lisa Cook, claiming she should be dismissed based on a mortgage fraud allegation from FHFA Director Bill Prute. Cook is contesting her potential firing, arguing Trump’s rationale does not meet the necessary criteria for such action.
There are also global concerns being raised about the independence of the Federal Reserve as Trump has previously threatened to remove Chairman Jerome Powell, whom he appointed in 2017. Recently though, he appears to have tempered those threats regarding Powell’s tenure, which runs until May 2026, especially as markets reacted negatively to the uncertainty surrounding his leadership.
At a broader level, many central banks worldwide are increasing their gold reserves, which further solidifies their assets. For example, Adam Grapinski, the governor of Poland’s central bank, has expressed intentions to raise the percentage of gold in central bank reserves from the current 20% to 30%.
