Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
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Gold surges past USD 3,000 as haven demand grows
Ole Hansen
Head of Commodity Strategy
Key points in this update:
- Gold has finally surpassed USD 3,000 per ounce, raising the obvious question: what’s next?
- Multiple drivers lie behind the rally, some of which are long-lasting, while others may eventually fade.
- In the short term, traders will be looking for US stagflation signs and Trump tariff tantrums to support additional gains.
- Real asset money managers, particularly in the West, needed a strong scare to return to gold—and that’s happening now.
Gold breached USD 3,000 per ounce today for the first time, pushing the price of a standard 400-ounce (12.4 kg) gold bar—held by central banks globally—to USD 1,200,000. This marks a stark rise from USD 110,000 in 1999, when I traded spot bullion for a hedge fund in London. Beyond reinforcing gold’s status as a long-term buy-and-hold asset, this surge reflects growing global instability, which has fueled strong demand for safe havens like bullion and, to some extent, silver.
Now that gold has reached USD 3,000, a period of profit-taking may follow, triggering a pullback to last month’s peak of USD 2,956 or even USD 2,930. However, the broader outlook remains bullish unless global risks ease significantly, thereby hurting momentum forcing speculators to reduce speculative futures positions. In addition to safe-haven demand and central bank purchases, fiscal concerns should continue to support gold. Spot gold is up 14% year-to-date, with a one-year gain nearing 39%. While a deeper correction remains a risk, we maintain our recently raised USD 3,300 target.
Before examining recent drivers, let’s revisit key reasons we highlighted in December for why the 2025 outlook remained strong, despite last year’s 27% gain:
- Central bank diversification: Increased purchases to reduce reliance on the US dollar and government bonds.
- Interest rate cuts: Lower rates reduce gold’s opportunity cost versus short-term government bonds.
- Safe-haven appeal: Geopolitical tensions, including conflicts in the Middle East and Russia-Ukraine, along with trade war risks, could drive inflation in 2025.
- Chinese demand: Investors turning to gold amid record-low savings rates and property market uncertainty.
- Fiscal instability: Rising global debt burdens, particularly in the US, where President-elect Trump’s costly policies—tariffs and tax cuts—exacerbate concerns.
Since January, Trump has upended the world order, while weak economic data, including fading consumer confidence and shifting US tariff policies have unsettled Wall Street and driven the dollar lower. The resulting stock market correction, led by recently high-flying companies now facing a potential end to US exceptionalism, has prompted overseas and US investors to seek alternatives. These factors have heightened stagflation risks—slowing growth, rising unemployment, and increasing inflation—potentially forcing the Federal Reserve to ease financial conditions. Markets now anticipate three 25-basis-point cuts by year-end, up from just one in January.
Real asset money managers, particularly in the West, needed a strong stock market and economic slowdown scare to return to gold—and that’s happening now. Many exited in 2022 when the Fed’s rate hikes made gold’s carrying cost prohibitive, but concerns over stagflation leading to lower funding costs are drawing them back, albeit cautiously. This demand appears broad, with funds rotating out of equities into short-term safe havens like US Treasury bonds and gold.
In today's podcast we look at some small divergences that could spell near term relief on risk sentiment, even if there is a steep hill to climb to significantly reverse this market rise. We also discuss gold trading at $3,000 per ounce and whether silver is set for brisk and large rally higher if it can break above the 35+ dollar per ounce level. Thoughts on crude oil, copper, a great set of links for further reading and much more also on today's pod, which features Saxo Head of Commodity Strategy Ole Hansen and Saxo Global Head of Macro Strategy John J. Hardy.
Recent commodity articles:
12 Mch 2025: Tariffs and the energy transition: Key drivers of copper demand
11 Mch 2025: Gold holds steady despite deleveraging risks in volatile markets
10 Mch 2025: COT Report: Wholesale reductions in speculators' USD and commodity longs
7 Mch 2025: Commodities Weekly: Tariffs, trade tensions, fiscal bazooka, and Ukraine
5 Mch 2025: Tariff threat disconnects HG copper from global market
4 Mch 2025: Stagflation and geopolitical tensions fuel renewed demand for gold
3 Mch 2025: COT Report: Broad retreat sees WTI longs slump to 15-year low
28 Feb 2025: Commodities weekly: Broad weakness as tariff fatigue sets in
24 Feb 2025: COT Report: traders turn selective despite ongoing broad rally
21 Feb 2025: Commodities weekly: energy market strength and Trump rethoric fuel surge
18 Feb 2025: COT report: crude, gold and grains see mild profit taking
5 Feb 2025: Broad Strength Drives Commodities sector to 26-month High
4 Feb 2025: Crude Oil Wipes Out 2025 Gains as Tariffs and Demand Weighs
3 Feb 2025: COT Report: Mixed Week Seen Ahead of Trump's Tariff Offensive
1 Feb 2025: YouTube: Joining Kevin Muir on The Market Huddle podcast
31 Jan 2025: Commodities weekly: Strong January led by precious metals
29 Jan 2025: Agriculture sector rally led by coffee, corn and cattle
27 Jan 2025: COT Report: Commodity buying extends to fourth week
24 Jan 2025: Commodities weekly: Trump tariff threats and energy agenda in focus
23 Jan 2025: Crude oil weakens amid tariff uncertainty
22 Jan 2025: Gold and silver see fresh gains as Trump 2.0 era begins
20 Jan 2025: COT Report: Elevated commodities longs face short-term risks
17 Jan 2025: Commodities weekly: Strong January rally pauses ahead of Trump
15 Jan 2025: Q1 2025 Commodity outlook: A bumpy road ahead calls for diversification
14 Jan 2025: COT Report: Hedge fund long jumps to 17-month high led by crude, gas and metals
13 Jan 2025: Crude oil rally amid winter demand and Russian sanctions
10 Jan 2025: Commodities weekly: Strong start to the year led by energy and metals
7 Jan 2025: COT Report: Managed money's year-end positioning in forex and commodities
Podcasts that include commodities focus:
14 Mch 2025: Is silver set to shoot the lights out?
10 Mch 2025: US un-exceptionalism is the theme
7 Mch 2025: US bear market risks ratchet higher. EUR train has left the station
4 March 2025: Are we on the verge of a big whoosh?
25 Feb 2025: Meltdown risks are rising. What to watch next
18 Feb 2025: Europe is on fire
5 Feb 2025: Mag 7 risks underappreciated?
3 Feb 2025: If new Trump tariffs stick, markets have only just begun to react
31 Jan 2025: Does the market think Trump is bluffing?
29 Jan 2025: The DeepSeek winners emerge
27 Jan 2025: DeepSeeking missile strikes global markets
24 Jan 2025: Four days in, Trump continues to dominate headlines, but ...
20 Jan 2025: Trump 2.0 swings into action
17 Jan 2025: Brace for Monday, as a new era begins
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