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This article has been automatically translated from Dutch. Click here to see the orginal article including all links to sources.
This week, we saw the gold price break records once again, while tensions between Donald Trump and the Federal Reserve continued to escalate. What is the importance of an independent central bank? And how could uncertainty around this independence impact the gold price? Have we already reached the peak of the gold rally, or is there more room to rise? Find out below!
It’s becoming a pattern: nearly every week we record a new gold price high. This week, the gold price once again reached record levels. On Tuesday, the Financial Times published an article titled: “Gold Hits $3,500 for the First Time as Trump’s Attack on Fed Chair Powell Shakes Markets.” In a post on Truth Social, Trump called Powell "Mr. Too Late" on Monday and urged the central bank to lower interest rates “NOW.” Another challenge for investors already grappling with the chaos surrounding import tariffs.
Donald Trump (source: Gage Skidmore)
Last week, Trump made similar statements, putting further pressure on the independence of the central bank. This conflict is not new—tensions between Trump and Powell were already rising before the election. At the time, Trump accused the Fed of bias and political gamesmanship. His accusations were not entirely unfounded: Rabobank’s Fed watcher had also observed that Powell appeared to have a clear motive to lower interest rates before the election. Economist Daniel Lacalle has also become increasingly critical.
World-renowned French economist Olivier Blanchard warned that Trump is playing with fire: “If there’s one red line a policymaker must never cross in economic policy, it’s undermining the independence of the central bank—especially when fiscal policy is not under control.”
Among economists, there is broad consensus that central banks must operate independently, free from political pressure. Political interference can lead to artificially low interest rates, which can trigger inflation and erode trust in the currency. This partly explains the flight into gold. Turkey provides a contemporary example of the risks that arise when central bank independence is compromised. Last week, the Turkish central bank decided to raise interest rates further to 46 percent in an effort to curb inflation driven by previous policy missteps.
Gold rally around Trump’s election (source: IGWT Report)
“Any curtailment of Fed independence would add to the upside risks for inflation, on top of the existing pressures from tariffs and elevated inflation expectations,” said Michael Feroli, U.S. chief economist at JPMorgan Chase, to the Financial Times. Trump's attacks are also damaging the market for U.S. Treasuries, normally considered a safe haven. Major investors are increasingly seeing risks in this market.
Gold has historically been a strong hedge against inflation and uncertainty. So far this year, the gold price has risen by over 25 percent in dollar terms. “There does indeed seem to be capital flowing into gold,” said Mitul Kotecha, head of FX and emerging markets strategy for Asia at Barclays. “A broad array of investors is currently buying gold.”
Gold price in euros per kilo as of Friday afternoon, April 25 (source: Holland Gold)
The €100,000 per kilo forecast made by Frank Knopers back in December is getting closer. In euros too, gold reached a record price this week, briefly surpassing €97,000 per kilo. We will discuss this extensively in next week's monthly update—follow us [on YouTube] to make sure you don't miss the broadcast.
As usual after a strong rally, a correction has now taken place. Is this the end of the gold rally? There were reports about a potential de-escalation of the trade war with China. However, this news appears to be inaccurate: the Chinese Ministry of Foreign Affairs denied that there are any ongoing trade talks with the U.S. This source of uncertainty thus remains.
Some investors relying on technical analysis now believe that gold is “overbought” and possibly even overvalued. However, several gold experts disagree. Otavio Costa of Crescat Capital wrote: “We are likely in the middle of a monetary realignment, and attempts to time short-term corrections based on extreme RSI levels, in my opinion, miss the bigger picture. Such an approach underestimates the structural macroeconomic imbalances that continue to incentivize governments to accumulate gold.”
Gold as a percentage of global financial assets (source: Money Metals)
Gold analyst Jan Nieuwenhuijs also wrote on X: “This gold bull market is far from over.” He again shared his January article titled "Why Gold Will Keep Shining in 2025 and Beyond." Like Costa, he sees a monetary realignment, with capital shifting from (among others) bonds to gold. According to his analysis, gold prices tend to surge at the end of debt cycles. He predicts a further revaluation of gold relative to global financial assets and expects the price could rise to $8,000 per ounce.
This week, JP Morgan forecasted a gold price of more than $4,000 per ounce by Q2 2026. Kitco also predicts that gold prices could rise further, citing weakening economic growth that could eventually force the Fed to lower interest rates, thereby fueling new demand for gold. They also expect central banks to continue buying gold in an effort to reduce dependence on the U.S. dollar.
Of course, the sharp rise in gold prices is not just good news for gold holders—it also reflects the uncertain times we are living through. Peter Schiff sees it as a warning sign, predicting a new financial crisis in the United States.
Bridgewater, founded by Ray Dalio, wrote in their newsletter this week that they see exceptional risks for U.S. assets. According to Bridgewater: "In the 50-year history of Bridgewater, we have witnessed many major economic shifts, so we do not say this lightly: this appears to be a once-in-a-generation transition."
Are we witnessing the beginning of a global monetary paradigm shift, in which gold—and potentially bitcoin—will take on a greater role? [Read Ferdinand Hoorweg’s article on this topic here.]
