Gold Reaches 2008-Era Heights as Trump Policy Chaos Weakens Dollar

The precious metals market is experiencing a dramatic rebound this week, with gold posting its strongest weekly performance since the 2008 financial crisis. The surge reflects a fundamental shift in investor sentiment as political uncertainty and currency weakness drive capital into tangible assets. Gold has climbed approximately 8% over the past seven days, pushing prices near $5,000 per ounce—a psychological barrier not breached since the aftermath of the global financial collapse nearly two decades ago. This rally marks a striking reversal from early 2025, when gold was trading below $3,000, breaking through $4,000 for the first time only last October.

Alongside gold’s ascent, silver has surpassed the $100-per-ounce milestone for the first time in its trading history, while industrial metals including copper are approaching $13,000 per ton. This synchronized surge across multiple asset classes signals that investors are fundamentally reassessing their portfolio allocations amid heightened geopolitical tensions and policy uncertainty.

Trump’s Policy Unpredictability Triggers Global Flight to Gold

The current gold rally finds its primary catalyst in the extreme unpredictability surrounding US administration policy, according to analysts at major financial institutions. When Trump announced demands for Greenland’s transfer to American control and threatened tariffs on eight European nations—including the UK—global equity markets experienced sharp selloffs. While stocks recovered following statements ruling out military intervention and news of a NATO agreement, gold prices continued climbing as investors sought safety.

Jane Foley, senior analyst at Rabobank, attributed the dollar’s deteriorating performance to what she characterizes as the “erratic nature” of the sitting president. The US dollar has recorded its worst weekly performance against major currencies since June, a decline that has benefited competing currencies like the British pound, which gained 1.3% in its best week against the dollar since August.

This dynamic creates a classic risk-off environment where investors abandon currency exposure in favor of gold—traditionally viewed as insurance against geopolitical shocks and currency instability. The metal’s performance during Trump’s previous presidency, when gold reached multiple all-time highs, demonstrates how political volatility can sustain precious metals demand over extended periods.

Central Banks Lead De-Dollarisation Push Toward Gold Holdings

Beyond short-term political factors, deeper structural forces are propelling the gold rally. A significant long-term trend is reshaping global central bank reserve strategies, with institutions steadily shifting allocations away from US dollar holdings and into gold instead.

Nicolas Bickel of Edmond de Rothschild emphasizes that this “de-dollarisation” represents the primary driver of sustained gold demand. Emerging market central banks, in particular, are actively diversifying their reserve portfolios—Poland’s central bank recently raised its gold reserve target from 20% to 30%, exemplifying this broader transition. Bickel notes that this structural shift toward gold represents a permanent recalibration of global monetary reserves, driven by ongoing political uncertainty and elevated geopolitical stress.

The trend has prompted major asset managers to adjust their own allocations. Edmond de Rothschild itself has increased its gold weighting from 5% to between 6% and 7% of its portfolios, signaling confidence in gold’s role as a superior store of value. Shaniel Ramjee of Pictet Asset Management concurs, observing that this central bank diversification represents a continuing expansion of global reserve assets and a systematic rotation away from dollar dependency.

Gold’s performance reinforces this narrative—the metal achieved its best annual return since 1979 in the prior calendar year and has already appreciated approximately 15% in the current year. Silver’s value has doubled since October, and platinum has reached new record levels, suggesting that the entire precious metals complex is benefiting from this reserve diversification movement.

Federal Reserve Uncertainty Fuels Debasement Trade and Gold Demand

A secondary dynamic amplifying gold’s appeal involves uncertainty surrounding Federal Reserve independence. Trump’s public criticism of Federal Reserve Chair Jerome Powell, combined with his calls for lower interest rates and plans to install a new chair when Powell’s current term expires in May, has sparked broader concerns about the institution’s autonomy.

This uncertainty has activated what financial markets term the “debasement trade”—a strategic positioning where investors sell currency holdings and purchase tangible assets like gold to hedge against scenarios where central banks finance government debt through monetary expansion. Such expansion reduces currency purchasing power and erodes returns on dollar-denominated assets.

Neil Welsh, head of metals trading at Britannia Global Markets, highlights how the current safety-seeking behavior extends beyond traditional safe havens, now encompassing even industrial metals as investors recalibrate risk parameters. Robin Brooks, former chief economist at the Institute of International Finance, observes that the dollar is hitting fresh lows against emerging market currencies this year, declaring plainly: “Dollar debasement has begun.”

This assessment captures the consensus view forming among market participants—the confluence of political unpredictability, central bank de-dollarisation, and Fed policy concerns has created a durable structural headwind for the dollar and a sustained tailwind for gold as the preferred alternative reserve asset.