4E Observation: Gold prices have repeatedly hit new highs, with an increase of over 26% this year. Is there still room for further growth?

Recently, the gold market has been booming, with gold prices hitting new highs repeatedly. On April 17, spot gold surged violently, breaking through $3,350 in one go, reaching a high of $3,357, with an intraday increase of over 3.6%, setting a new record. As a traditional safe-haven asset, the appeal of safe-haven assets has significantly increased since Trump took office, amid escalating global trade tensions and emerging downward pressure on the U.S. economy. Since the beginning of this year, gold prices have risen by over 26%, approaching last year's total increase, demonstrating a strong upward trend.

Surge in Risk Aversion, Gold Becomes the Top Choice in Turbulent Times

The core driver of this round of gold price surge is still the rapid increase in risk aversion demand. After Trump took office and implemented more aggressive trade policies, global trade tensions escalated quickly. The new tariff policies targeting China and other economies not only disrupted global supply chains but also triggered global market concerns about the combined risks of "re-inflation + economic recession."

From the perspective of the U.S. itself, economic data has already signaled weakness. The Michigan Consumer Confidence Index released in April has declined for the fourth consecutive month, and data from the service sector is further deteriorating, reflecting that American consumers' confidence in the economic outlook is weakening.

The market originally expected the Federal Reserve might adopt a more aggressive rate cut policy in 2025, but the latest statements from Powell and other officials indicate that the Fed will maintain a "wait-and-see" strategy to balance employment and inflation targets. This has led to divergent expectations in the market regarding the timing of rate cuts, increasing policy uncertainty.

Even more concerning for the market is Trump's potential threat to the independence of the Federal Reserve. Last Wednesday, Trump made an emergency request to the U.S. Supreme Court to allow him to dismiss the leaders of independent agencies, which the market believes could pave the way for the dismissal of Powell. Yesterday, Trump harshly criticized Powell's interest rate policy as "always too late and wrong," stating that dismissing Powell is urgent. If the independence of the Fed's monetary policy is interfered with, market concerns about uncertainty risks will further escalate, and risk aversion sentiment may drive gold prices higher.

Under this dual influence of "macro chaos + policy uncertainty," gold has once again become the core safe-haven anchor in the eyes of global capital.

Inflation Expectations Boost Gold Prices

For some time, market expectations for the Federal Reserve to cut rates three times this year have been rising, with some institutions even predicting that an aggressive rate cut cycle could begin as early as May. However, Powell's remarks on the 17th released more "wait-and-see" signals, indicating that short-term inflation may rebound due to the impact of the new round of tariff policies, while economic growth will also be under pressure. Balancing "maximum employment" and "price stability" still requires caution. This statement has led the market to reassess the rate cut path and has increased the demand for gold as a store of value and safe haven.

It is worth noting that although recent U.S. CPI and PPI data have declined, the price transmission of trade policies to the consumer side typically has a lag effect. The market generally believes that the real "inflation resurgence" will not begin to manifest until this summer. This means that the Federal Reserve may face a more complex policy dilemma, and gold's anti-inflation value will be further amplified during this phase.

Capital Flows Strengthen the Logic of Gold Price Increase

The choice of capital often reflects the market's true expectations. According to data, as of April 17, the world's largest gold ETF—SPDR Gold Trust—had a gold holding of 952.29 tons, having increased by over 81 tons since Trump took office, a rise of 9.3%. This trend indicates that Western sovereign funds and institutional investors are systematically reallocating gold positions to cope with potential long-term risks.

At the same time, the continued gold purchases by central banks around the world also provide bottom support for gold prices. Data from the World Gold Council shows that global central banks continue to accumulate gold at an astonishing rate, with total investment demand expected to grow by 25% in 2024, reaching a four-year high. This trend is expected to continue into 2025, especially as emerging market countries adjust their foreign reserve structures in the context of "de-dollarization," further enhancing gold's strategic position as a "currency substitute."

With multiple factors such as risk aversion, anti-inflation, and hedging against dollar credit risk, the long-term logic for gold's price increase has already formed a consensus. Goldman Sachs has raised its year-end target for international gold prices to $3,700 and predicts that prices may reach $4,000 by mid-2026.

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