Gold is on track for an eight-month rally, potentially the longest on record, but multiple headwinds threaten to end the rally. Rising interest rates, a weak equity and credit backdrop, and mounting deficits are cited as the primary risks to the rally. Even after price corrections, cryptocurrencies, gold, and silver remain exposed to macro risks.
BREAKING: December PCE inflation, the Fed’s preferred measure, rose to 2.9%, with core PCE at 3.0%. Core PCE inflation is now at its highest since November 2023. Tariff confusion has re-ignited and tensions with Iran threaten risk assets, limiting upside. The U.S. Treasuries market adds another layer of uncertainty.
Central banks are now holding more gold in FX reserves than U.S. Treasuries for the first time since 1996, underscoring gold’s hedge against fiat currency risk. China’s post-Lunar New Year gold shortage is adding upside momentum, with reports that gold shops halted sales and refunded pre-holiday contracts. Analysts warn that severe shortages could push gold prices toward $10,000 per ounce, though a sudden correction remains possible.
Some analysts point to resistance near $5,160 and a key gap around $5,100 that could cap gains. Overall, gold’s rally remains intact, but investors should weigh surging demand, geopolitical uncertainty, and technical indicators, as these factors could make moves historically significant and highly volatile.
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