Dollar Under Pressure: Gold Surges as Investor Unease Mounts

Investor caution remains elevated amid geopolitical tensions, unsettled global equities, and a sharp rally in gold, which has climbed more than $100 to $4,865. While the US Dollar (USD) shows only marginal strength, concerns over Fed independence, persistent inflation, and rising yields could prompt investors to reduce their exposure to US assets in the coming months.


Fed Independence in Focus


Heightened market uncertainty is being fueled by President Trump’s Greenland ambitions and the potential fallout on global trade. Non-core major currencies that underperformed previously have rebounded, while core majors have softened. The Swiss franc is currently the weakest major currency, whereas the South Korean won, South African rand, and Mexican peso lead the gains. Global equities remain mixed, with Asian markets fluctuating, European markets lower, and US futures showing moderate gains. Bonds are similarly mixed, though Japanese government bonds have recovered after recent losses.


Gold’s dramatic rise above $4,800 signals persistent investor caution. The US Dollar Index (DXY) is slightly higher, yet technical indicators suggest continued bearish pressure. While some European investors are trimming US Treasury holdings, a widespread divestment appears unlikely.


Key Risks Ahead

Several factors could influence market behavior in the near term. These include the choice of Fed Chair to replace Powell, persistent inflation, rising bond yields, and calendar risks affecting US equity markets during the mid-term year. The Supreme Court is set to hear arguments regarding President Trump’s attempt to remove a Fed Governor, a case that could impact perceptions of Fed operational independence.


FX Leadership Shifts

Foreign exchange markets are adjusting as investors reassess risk amid political uncertainty. Core currencies, previously leading, are under pressure, while emerging and non-core majors see renewed interest. This rebalancing highlights how closely investors are watching US fiscal and monetary developments.


Gold Solidly Remains a Safe Haven
Gold has extended its rally to near all-time highs around $4,900 per troy ounce. Risk appetite remains fragile, with investors prioritizing safe-haven assets amid ongoing tensions and policy uncertainties.


The US Dollar and broader financial markets face potential volatility as geopolitical and domestic policy risks converge. Investors are closely monitoring Trump’s statements, Fed decisions, and global fiscal developments to gauge the future trajectory of FX and commodities markets.