Gold prices could surge to $5,000 an ounce if tensions between the United States and China continue to escalate, according to some forecasts reaching The Armchair Trader this week. The precious metal continues to rally aggressively, breaching fresh all-time highs breaking $3,500 on Tuesday this week.
The momentum is intensifying as the global investment community braces for what could become a prolonged, entrenched economic war between the two largest economies in the world. This has led some of the world’s top wealth managers to forecast further significant gains in gold and to advise clients to diversify out of US assets.
Nigel Green, CEO of deVere Group, who forecast gold to $5000, says:
“The world is watching a strategic decoupling of the world’s two largest economies in real time. What began as a tariff spat is evolving into a geopolitical and economic confrontation—with implications that stretch far beyond trade. In this environment, gold is becoming the ultimate financial insurance.”
Investors are rapidly repositioning as the US-China standoff deepens. Tariffs are rising. Technology restrictions are expanding. Capital markets are fragmenting. The notion that either side will back down is fading fast. And as the risks of a full decoupling grow, so does the demand for gold.
USD’s safe haven status under threat
The US dollar, traditionally seen as the global safe haven, is losing its footing as these tensions rise. Ironically, the more strained the relationship between Washington and Beijing becomes, the less confidence investors have in the dollar, and the more appealing dollar-denominated assets like gold become.
It’s not just about diversifying away from the greenback, it’s about preparing for the consequences of a world where global trade flows, supply chains, and financial systems are being pulled in opposing directions. Meanwhile, political uncertainty within the US is amplifying the gold rush.
“Gold tends to do well when other assets do badly, but it does best when people lose faith in central banks, and Trump is doing everything he can to destroy trust and confidence in the Federal Reserve,” said Adrian Ash, Director of Research at BullionVault.
This week’s jump to $3,500 followed gold’s third $100 gain in EIGHT sessions. Gold is also running to fresh record highs in all other currencies, breaking through £2,600 for the first time ever. That shows how the chaos of Trump’s second term is a genuinely global issue.
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Feud with the Fed is providing further momentum
Trump’s renewed attacks on Federal Reserve Chair Jerome Powell and reports that his administration considered ways to remove him, have rattled global markets. When the independence of central banks is called into question, the implications for inflation, interest rates and currency stability become unpredictable. It’s no wonder investors are seeking shelter.
Gold, long considered the traditional store of value in times of upheaval, is once again proving its strategic relevance—not just as a hedge, but as a core allocation. Importantly, inflation risks are no longer viewed solely through the lens of economic cycles.
With both Washington and Beijing engaging in massive state-driven industrial strategies and supply-chain protectionism, inflationary pressures are being embedded into the new global order. Unlike past episodes of inflation sparked by excess demand, this one is being structurally fuelled by economic nationalism.
The days of cheap, frictionless trade seem to be behind us. That has consequences – particularly for prices. It means higher structural inflation, weaker currencies, and a renewed focus on hard assets. Gold sits at the centre of all three.
The current surge in price is not a speculative spike, it reflects a repricing of risk. Wealth managers are telling us that the next phase could be even more dramatic if US-China relations deteriorate further. Should Washington and Beijing continue to double down instead of de-escalate, we’ll see continuing significant inflows into gold. As the world becomes more fractured, investors will keep chasing safety.
“Over the medium to long-term, investors will find it makes more sense to seek out alternatives and gradually diversify part of their portfolios away from US assets,” says Arun Sai, a senior multi-asset strategist with Pictet Asset Management. “German Bunds and gold are likely to be benefit most from this re-allocation, but other assets including emerging market local government bonds and high quality credit should also see inflows.”
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