What’s next for gold after $4000? – AP Institutional
Gold has surged past the historic $4,000 an ounce mark, a watershed moment placing the metal as one of the best performing major assets in 2025. Yet, some market participants view this as cautionary, underscoring market’s unease with dollar stability amidst the current macro and policy backdrop.
Hedge fund titans Ray Dalio and Ken Griffin have both pointed to the erosion of confidence in the dollar as a key driver, with Dalio framing gold as a superior safe haven in times of monetary debasement, while Griffin warns that the metal’s ascent signals growing anxiety over the greenback’s long-term role in the global system.
How right are they? It is true that gold has traditionally served some signaling quality, a “canary in the coal mine” for risks on the horizon. That dynamic appears alive today. The gold surge is not only a reflection of its strong performance but may also be a warning light flashing against the backdrop of US policy turbulence.
With the White House pursuing unconventional reforms, growth momentum slowing, and the administration openly challenging the independence of the Federal Reserve and other institutions, investors may be right to read gold’s ascent as a barometer of rising systemic risk.
Gold’s ascent has been particularly striking because the traditional macro drivers (as a real, non-yielding asset) of falling USD and falling long yields aren’t present. The USD against a basket of currencies as represented by the US Dollar Index (DXY) has been moving sideways since mid-year, as has the 30-year U.S. Treasury (UST) yield.1
A major driver of demand has been from central banks accumulating gold as a form of official reserves. Counting gold shows the reserve shift is not from USD into EUR or RMB, but from fiat currencies into gold. In fact, gold has overtaken the EUR in reserves. In our view, it’s possible that central banks may be buying gold because they see no fiat alternative to the dollar.
