Gold futures are up more than 30% year over year and sit at a two-month high. This rally has no major geopolitical shock behind it. The crisis pushing gold higher is the US debt situation, and the "debasement trade" from late 2025 is starting again.
For years, investors expected gold to rise when stocks fell. Now gold and stocks are rising together. This move is a dollar and interest rate story more than a stock market story. The dollar is stretched and starting to fall. After last week's CPI data, market bets on the Federal Reserve raising rates have dropped. The market now sees that rates cannot really be raised because of the debt load. If rates hold steady or start getting cut in 2027, that helps gold a lot.
What is driving demand
Central bank buying is the main force. Central banks own more gold than any other asset. They are selling dollars to buy gold right now, and that buying will continue.
Fiat currencies are losing value fast because there is so much debt. The US M2 money supply has tripled since 2008 and now stands at an all-time high of $23 trillion. Central banks want out of fiat and into something more solid. Countries are moving reserves away from the traditional US dollar.
What matters most over the next 6 to 12 months
Follow what the Federal Reserve and central banks are doing. They are buying gold heavily, they see an attractive entry point, and they dislike the money printing and the debt. Central banks globally will drive the gold price over the next year more than anything else.
Price outlook
Gold was at $5,500 right before the war started. The war rattled gold and pushed it down. Now focus is shifting away from rising rates, oil prices, and war, and back toward the debt problem. Gold can climb back to $5,000-$5,200. UBS (UBS) has a price call of $5,200, which is a conservative year-end target.
The AI and silver link
The stock market has not affected gold at all. Gold is a dollar and debt story, so chip stocks and AI stocks can go up or down while gold keeps moving on its own drivers. The AI demand story belongs to silver, not gold. Silver is needed for AI data centers, and supply is tight, with China taking 70% of global silver. Gold keeps rising on dollar weakness and central bank buying.
On waiting for a pullback
The pullback already happened over the past four months, when the war suppressed prices. Gold is up $400 in the past couple of weeks. There is still a lot of room to rise. This looks like the first or second inning of a gold bull market, so the case for getting in now is strong.
