U.S. Dollar Weakens as Gold Prices Hold Near Historic Highs

Gold continues to demonstrate remarkable strength in early 2025, trading near record levels while the U.S. dollar faces mounting pressure. The precious metal reached an unprecedented closing price of $2,957 per ounce on Thursday, February 13, marking a significant surge from its December position of $2,600.

Despite a brief setback on Friday, February 14, when the April futures contract declined by $63 to settle at $2,893, the market quickly recovered. The temporary dip proved to be merely profit-taking by short-term traders rather than the beginning of a meaningful correction. By Tuesday, gold had rebounded strongly, reclaiming most of its losses with a $60 gain to reach $2,954. As of 5:00 PM ET today, the April futures contract is trading at $2,955.70, up $6.10.

The precious metal's impressive performance, representing an 11% gain since the start of 2025, has been fueled by robust bullish sentiment and increasing safe-haven demand. This strength contrasts sharply with the U.S. dollar's trajectory. Since mid-January, the dollar index has declined steadily from 109.64, dropping an additional 0.75% today to 106.359.

Market dynamics are being significantly influenced by the new administration's trade policies, particularly its stance on international tariffs. The implementation of a 10% tariff on Chinese imports has already begun to impact global trade flows, with threats of additional tariffs on other trading partners creating market uncertainty.

Saxo Bank analysts note, "Gold hit a fresh record... supported by ongoing momentum and haven demand in response to Trump's increasingly erratic behavior. The Fed's cautious stance on rates received little attention as the price continued towards its next big psychological level at USD 3,000."

Adding to market concerns are persistent inflationary pressures in the U.S. economy. January's inflation report exceeded economists' expectations, recording the largest monthly increase in consumer prices since August 2023. Investors are particularly worried that the implementation of widespread tariffs could further accelerate inflationary trends, driving additional interest in gold as a hedge against economic uncertainty.

Wishing you as always good trading,