Gold extended its record run on Tuesday, breaching $3,500 per ounce, as weakness in the dollar, US President Donald Trump’s attacks on the Federal Reserve and trade war fears spurred demand for the safe-haven asset.
Spot gold was up 0.5% at $3,440.51 an ounce shortly after 9am New York time, after rising as much as 2.2% to $3,500.05 earlier in the session. US gold futures climbed 0.9% to $3,454.60.
Thai selling prices were quoted late Tuesday at 54,450 baht per baht-weight (15.2 grammes), an increase of 1,450 baht from the day before, according to the Thai Gold Traders Association.
“Gold is continuing to find buyers on any short-term dips, and it is really difficult to say how much further it can go,” said Fawad Razaqzada, market analyst at City Index and Forex.com.
“Momentum is clearly strong, which is discouraging investors or traders from selling gold significantly.
“The primary driver of gold is undoubtedly ongoing trade tensions. The standoff between the US and China has created the kind of economic fog that keeps risk assets on edge and gold bulls firmly in control.”
Gold, often used as a safe store of value during times of political and financial uncertainty, has risen more than 30% so far this year, owing to central bank buying and escalating trade tension between the US and China.
Adding to tensions in the market, Trump ramped up his criticism of Fed chief Jerome Powell, calling him a “major loser” and demanding he cut interest rates, which rattled financial markets and sent the dollar lower.
Trump aides have acknowledged they were looking at the law to see if there is any way Trump can fire the Fed chief if he wants to.
“I think the uncertainty with respect to tariffs is the main catalyst for currency depreciation pressures in Asia, which is ultimately one of the main fundamental drivers for gold buying activity,” said Daniel Ghali, a commodity strategist at TD Securities.
Traders will look to speeches by several Fed officials later this week, hoping for insights into future monetary policy amid the concerns about the central bank’s independence.
It’s possible that gold could see a correction at some point, some traders caution. Its relative strength index (RSI) stands at 79, indicating that the metal is overbought.
Bitcoin rallying
Bitcoin, meanwhile, advanced to its highest level since early March, fuelling optimism that the biggest cryptocurrency is finally breaking free of a longstanding tendency to move in tandem with US tech stocks.
After briefly succumbing to the risk-asset selloff that followed Trump’s announcement of sweeping tariffs on allies and rivals alike, Bitcoin has rallied almost 20% from an April 7 low. In doing so, it has begun trading more akin to gold, the standout asset in markets roiled by tariff uncertainty.
The decoupling from US assets — in large part driven by a slumping dollar — offers some relief for crypto bulls after Trump’s first three months in power failed to ignite the rally many had expected.
Even after April’s gains, Bitcoin is trading well below where it was when Trump returned to the White House.
Trump’s attacks in the past week on Powell have further unnerved investors and fuelled the narrative that the era of US “exceptionalism” that drove a roaring stock market is over.
“One of the possible ramifications of the US decoupling is a revisit to the long-term Bitcoin bull case as a store of value,” said Augustine Fan, a partner at the crypto trading platform SignalPlus.
“We’ve been critiquing Bitcoin as a leveraged Nasdaq proxy over the past year, but it has finally started to show some signs of decoupling.”
Bitcoin gained as much as 3% and traded at almost $90,000 as of 9.20am in New York on Tuesday.