Gold has quietly surged to a record high despite ongoing volatility linked to the DeepSeek artificial intelligence model, which has weighed on stock market performance. As equities opened the new week with significant losses, driven by concerns that the Chinese AI model’s cost-effective capabilities might reduce sector investments, gold defied the trend by targeting unprecedented levels near $2,800 per ounce. Currently valued at $2,757, the precious metal has gained 0.65% in the past 24 hours and surged over 35% in the last year. Analysts highlight $2,762 as a critical resistance level to watch if bullish momentum continues, with $2,747 serving as a key support threshold.
Gold’s ascent is partly attributed to geopolitical and economic uncertainties, including former President Donald Trump’s proposed tariffs on imports like computer chips, pharmaceuticals, and steel. These measures, aimed at boosting U.S. production, carry inflationary risks that enhance gold’s appeal as a safe-haven asset. Meanwhile, the metal’s resilience stands out against traditional market dynamics. Historically, gold prices tend to decline when the U.S. dollar strengthens or Treasury yields rise, yet gold has climbed steadily despite the dollar reaching a 52-week high and the 10-year Treasury yield exceeding 4.80%. This anomaly, noted by The Kobeissi Letter, suggests investors are increasingly seeking refuge in gold amid mounting global uncertainties.
Several factors underpin this divergence. In the U.S., persistent inflation and record deficit spending contrast with China’s deflationary pressures, creating a dual threat of economic instability. Additionally, anticipation surrounding the Federal Reserve’s upcoming policy decisions has amplified gold’s role as a hedge against potential market turbulence. Earlier in 2024, gold’s rally toward $3,000 paused following the Fed’s interest rate cut, though some analysts warn that its sustained upward trajectory—defying conventional market signals—could foreshadow an unforeseen “black swan” event. This combination of macroeconomic tensions and shifting investor behavior underscores gold’s unique position in the current financial landscape.