Gold’s Rollercoaster: AI, Trade Tariffs, & Fed Hopes
Gold’s Pulse: Still Ready to Surge
Just as investors were about to cheer gold past the $2,800 mark, a sudden bearish spike threw the rally into chaos. But the momentum is still very much alive.
The AI Upset That Shook the Markets
- Deepseek’s meteoric rise raised eyebrows about AI valuations and caused a wave of deleveraging across assets, including gold.
- Even though the market is gradually realizing that Nvidia remains king and China’s AI scene isn’t a game‑changer yet, risk‑aversion is creeping back.
- This shift removes a major barrier, clearing the path for gold’s next climb.
Why Gold Still Matters Beyond AI
Gold isn’t just an AI‑oriented side hustle; it’s a safe‑haven against unpredictable trade risks.
- The U.S. government’s firm stance on Colombia tariffs—starting February 1—has made traders think twice about more aggressive measures.
- Potential tariff hikes could feed domestic inflation, heighten economic uncertainty, and turbo‑charge global “de-dollarization” efforts—both boosting gold’s appeal.
- Meanwhile, Trump’s push on the Fed to slash rates, coupled with falling 10‑year Treasury yields and a weaker dollar, adds backfire support for gold’s near‑term rise.
What’s on the Radar Right Now?
With Deepseek and U.S. trade policy front and center, attention now sharpens on:
- The Fed’s decision tonight.
- Powell’s speech.
- Friday’s core PCE inflation data.
If Powell stays hawkish and pushes back against rate‑cut expectations, gold could pull back short‑term. However, the market has already priced in at least two cuts this year. A dovish pause could give gold a modest lift.
The Inflation Curve & Gold’s Fate
A strong core PCE (above the 2.8% y/y forecast) might prompt the Fed to stay on the sidelines, potentially stalling gold’s surge. Conversely, a weaker reading will widen the gap between the Fed’s stance and Trump’s agenda, igniting more gold volatility. Either way, one thing’s clear: the gold market is primed for a storm of swings.
