Gold Causes Mounting Panic. Forecast as of 11.03.2025
The spillover of gold bullion from Europe to North America has been the butterfly effect for a storm in the financial markets. Can the precious metal be the remedy? Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- Gold imports caused the growth of the US trade deficit.
- Stocks of precious metal on COMEX soared to record peaks.
- The inflow of capital into ETFs is going on for the sixth week.
- Consider buying gold if XAUUSD quotes climb above $2,930.
Weekly Fundamental Forecast for Gold
There is an opinion in the market that the rumors of a recession in the US were triggered not by a series of disappointing reports on the US economy, not by Donald Trump’s unwillingness to rule out a recession, but by gold! It was the signal from the Atlanta Fed’s leading indicator that GDP fell by 2.8% in the first quarter, which really frightened investors. This, in turn, was the result of a record trade deficit, and the blame is on the precious metal!
In January, the US imported $325.9 billion worth of goods, up $36 billion from December. Of that increase, $20.5 billion was in “fabricated metal products,” which includes shipments of gold. Unlike other commodities that are used in production and manufacturing, gold settles in warehouses, meaning it does not increase consumer and business activity. As a result, the leading indicator from the Atlanta Fed has begun to sound the alarm.
US Imports of Gold Bars
Source: Bloomberg.
As a result of the spillover of gold from Europe to North America, COMEX gold inventories jumped to 39.7 million ounces worth $115 billion, both record highs. At the same time, rumors of an impending recession drove stock indices lower. Along with them, the precious metal, which investors have been in the habit of selling during S&P 500 pullbacks in order to meet margin requirements on stocks, plunged.
At the same time, the decline in the XAUUSD was not deep. A safety cushion of sorts for gold was the inflow of capital into gold ETFs as the expected timing of the Fed’s resumption of its monetary easing cycle was shifted from July to May. Gold ETF holdings have risen for six consecutive weeks, reaching their highest level since December 2023.
Gold Price and Gold ETF Holdings
Source: Bloomberg.
Will the price of gold impact the recession rumors it has generated? The process of pouring gold into North America has been suspended as arbitrage opportunities have diminished significantly. This significant import is due to concerns about Donald Trump’s tariffs. However, it is unlikely that these tariffs will be imposed on gold. Additionally, gold supplies were merely the catalyst that ignited the economic fires. The markets focus on the possibility of a recession, and halting bullion flows is unlikely to be a solution.
Weekly Trading Plan for Gold
Only robust US macroeconomic data is likely to support US stock indices and the XAUUSD rate. On paper, this should result in a strengthening of the US dollar and an increase in US Treasury yields, while disappointing figures will continue to boost the precious metal. As a result, gold purchases can be considered if the precious metal exceeds the level of $2,930 per ounce.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
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