Rumors of tariffs on gold imports, the United States’ reassessment of its gold reserves at Fort Knox, and the Mar-a-Lago Accord have triggered a rally in XAUUSD quotes. However, the conspiracy theories surrounding these events have prompted questions regarding their validity. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The White House will not revalue the gold reserve.
- Gold is buoyed by falling Treasuries and a weaker US dollar.
- Gold ETF inventories have reached the highest level since January 2024.
- Short trades can be considered if the precious metal falls below $2,920 per ounce.
Weekly Fundamental Forecast for Gold
When gold’s old drivers fail to push its price above $3,000 per ounce, conspiracy theories come into play. There are numerous rumors circulating in the markets, such as the possibility of the White House imposing tariffs on precious metal imports or Washington forcing its trading partners to restructure their debts in favor of long-term bonds under the so-called Mar-a-Lago Accord. There have also been speculations that the US will revalue its reserves at Fort Knox, though the validity of these claims is questionable. Against this backdrop, the sustainability of the XAUUSD rally is debatable.
The tariff threats from Donald Trump have prompted gold bulls to transfer their holdings from the Old World to the New World, contributing to a surge in COMEX inventories. However, such import duties are not likely to be implemented, and it appears that someone has gained substantial profit from the recent gold withdrawals from vaults in London.
COMEX Gold Inventory
Source: Bloomberg.
Treasury Secretary Scott Bessent’s remarks regarding the White House’s potential interest in seeing lower Treasury bond yields have led to the emergence of a new conspiracy theory. This theory posits that Donald Trump may attempt to coerce his trading partners into exchanging short-term securities for long-term ones, which is speculated to result in a decline in rates for the latter, thereby supporting XAUUSD quotes. However, 10-year Treasury bond yields have been slow to rise due to signs of cooling in the US economy and the shift of the expected timing of the Fed’s monetary expansion cycle from September to June.
In addition, Scott Bessent has refuted the theory that the US overestimated their gold reserves in Fort Knox, which had fueled the rally of the precious metal. The current environment is favoring gold, as evidenced by the weakening US dollar, lower Treasury yields, and capital inflows into ETFs. However, the question remains whether these factors will be sufficient to propel gold to $3,000 per ounce.
Gold Performance and ETF Holdings
Source: Bloomberg.
A particularly favorable economic environment, coupled with gold’s uninterrupted record-breaking performance, has resulted in the largest weekly inflow into exchange-traded funds (ETFs) since 2023, reaching 16 tons. Moreover, holdings have reached their highest point since January 2024.
However, the ongoing armed conflict in Ukraine is approaching a conclusion, which is likely to diminish central banks’ interest in the precious metal. Furthermore, the recent improvement in US-Russia relations could potentially reverse dedollarization. Significant corrections of the US stock indices in the past have led to pullbacks in the XAUUSD, as investors sought to meet margin requirements on shares by selling other assets.
Weekly Trading Plan for Gold
The conspiracy theories will not be confirmed, and the geopolitical risks in Eastern Europe will be reduced. Therefore, the gold rally will unlikely continue at the same pace as before. Against this background, short-term short trades can be considered if gold quotes drop below $2,920 per ounce.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
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