In a striking geopolitical landscape, gold prices are making headlines by flirting with the $2900 markAs of Monday, spot gold settled at $2897.49 per ounce, marking a 0.5% increase from the previous trading session, and peaked at $2906.38 earlier in the dayThis move comes amidst various economic signals, with gold displaying remarkable resilience above the $2800 level for four consecutive weeksThe volatility in the dollar index, alongside the currents of U.S. trade policy uncertainty, is reshaping the framework of global asset pricing.

On the same day, the dollar index dipped to 95.87, a low not seen since December 2024. This downturn in the dollar reflects persistent weak economic data and shifts in monetary policy expectationsNotably, the core PCE price index saw a year-on-year increase of 3.4% in January 2025, below the anticipated 3.6%, marking its fourth straight month of retreatIn addition, the ISM manufacturing PMI slumped to 47.8, the lowest reading since July 2024, with the new orders index falling into contraction territory at 45.2. This combination of "economic cool-down + inflation retreat" is ever-evolving the Federal Reserve's approach toward its policy calculus

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Futures linked to the Federal funds rate indicate that market participants are now anticipating four rate cuts in 2025, a significant rise from the two initially projected at the start of January; the timing for the first cut has been brought forward to JuneThe New York Fed's "Nowcast" model is predicting a mere 0.8% GDP growth in Q1 of 2025, compounding expectations for loosening monetary policiesThe decline of the dollar acts essentially as a double-edged sword for gold's ascent: it not only lowers the purchasing costs for holders of non-dollar currencies, leading to a 22% increase in Indian gold imports during January, but also diminishes the allure of dollar-denominated assets, prompting sovereign wealth funds and central banks to heighten gold allocations.

On February 22, the U.S. government reiterated its "comprehensive reciprocal tariff" policy, which has reverberated like a stone thrown into a still pondAccording to statements from the U.STrade Representative's office, any country imposing tariffs on American goods will encounter similar retaliatory measures, leading to ripple effects across global trade dynamicsThe European Commission, for instance, announced retaliatory measures on $28 billion worth of U.S. agricultural productsMeanwhile, Japanese automakers are contemplating shifting parts of their production lines to Southeast Asia, aiming to sidestep new tariffsThis uncertainty directly impacts the global trade landscape, with the World Trade Organization slashing its forecast for global trade growth from 3.4% to 1.8% for 2025, while the International Monetary Fund warns of a potential "new cold war-style economic split." In such a context, gold is being rediscovered as a "non-sovereign credit asset" of enduring value amidst chaos.

The strong performance of gold is catalyzing a revaluation across the broader precious metals sector

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Spot silver has now surged past $33 per ounce, a new high since 2021, powered by both industrial demand and its safe-haven attributesMeanwhile, platinum prices reached $995 per ounce, driven by expediting industrial applications spurred by emission reduction regulations in the automotive industryPalladium has soared to $1020 per ounce amid intensifying supply constraints following Russia’s export limitationsThis upward trajectory encapsulates the strategic reserve needs for critical metals within the global manufacturing landscapeGoldman Sachs recently highlighted in its latest report that the transformation to global green energy is poised to escalate copper demand by 50% and lithium demand by an astounding 300% by 2030, all reinforcing the strategic relevance of precious metals as "industrial vitamins."

This upcoming Wednesday brings the release of the Federal Reserve's minutes from its February meeting, which might serve as a pivotal turning point for gold pricesMarket sentiments suggest the minutes may present insights into the sustainability of inflation declines, varying levels of concern regarding recession risks, and potential adjustments to policy tools (such as altering the pace of quantitative tightening). Notably, comments from StLouis Fed President James Bullard have recently shown subtle shifts, morphing from a firm "anti-inflation" stance to one of "closely monitoring economic data." Such a linguistic shift is being interpreted by the market as a possible precursor to policy changeShould the minutes hint at a dovish outlook, the dollar could accelerate its depreciation, propelling gold prices towards a robust assault on the $3000 mark.

Historical trends indicate that when the VIX fear index breaches the 25 mark, gold typically generates excess returns

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