Dollar anxiety drives precious metals rally as gold trade gets crowded

Core Insights - The surge in gold prices above $4,000 per ounce is causing a ripple effect in other precious metals due to concerns over the Trump administration's economic policies, which may lead to a devaluation of the U.S. dollar [1][4] - Precious metals like silver, platinum, and palladium are experiencing significant gains amid geopolitical and economic uncertainties, particularly related to U.S. trade policies [2][4] - Despite a remarkable 53.8% year-to-date increase, gold is the worst-performing precious metal this year, while platinum leads with an 83.6% rise, silver has surged 70.4%, and palladium is up 60.5% [3] Precious Metals Performance - Gold's rally has made it the second-largest reserve asset after the U.S. dollar, surpassing the euro in 2024 [5] - Central banks' gold holdings have increased, now accounting for a record high of 24% of total assets, up from 23.3% in the previous quarter [6] - Analysts suggest that while gold may continue to rise, the pace could slow as high prices incentivize new mining operations, potentially increasing future supply [5] Investment Strategies - Analysts recommend investing in hard assets rather than shorting U.S. bonds or equities, with palladium currently favored [7] - The rally in silver is closely tied to record-high gold prices, prompting HSBC to raise its average price forecast for silver to $38.56 per ounce for this year and $44.50 per ounce by 2026 [7]