Gold’s safe-haven appeal briefly dimmed after the U.S. and China agreed to a 90-day pause in their trade conflict, but one market strategist believes the precious metal is far from losing its shine. Heightened geopolitical tensions, economic uncertainty, and concerns over monetary policy could keep gold in demand, even if trade disputes ease.
Nitesh Shah, Head of Commodities and Macroeconomic Research for Europe at WisdomTree, told Kitco News that beyond the trade war narrative, the next big risk for global markets lies in U.S. monetary policy—particularly the independence of the Federal Reserve.
Federal Reserve Chair Jerome Powell has faced ongoing criticism from President Donald Trump for maintaining a neutral policy stance and resisting interest rate cuts, despite stable growth and rising inflation risks. Trump has called Powell a “fool” but insists he will not remove him from office before his term ends in May 2026. Still, Shah warns that markets could grow uneasy if the administration pressures the Fed when selecting Powell’s eventual replacement.
“If the Fed’s independence is called into question, its institutional credibility could erode,” Shah explained. “Gold tends to thrive in such conditions as it stands in contrast to fiat currencies that can be influenced by political agendas. In times of both geopolitical and monetary policy uncertainty, investors turn to hard assets like gold.”
Although gold is currently trading below last month’s record high of $3,500 per ounce, Shah sees renewed momentum on the horizon. His baseline forecast projects prices at $3,610 in early 2026, with a bullish scenario targeting $4,000 in the same period.
Shah’s models suggest speculative demand could remain strong amid recessionary fears and persistent inflation. “It took 14 years for gold to move from $1,000 to $2,000—and just over a year to jump from $2,000 to $3,000. Another $1,000 gain from current levels doesn’t seem far-fetched,” he noted.
He also points to a potential “Mar-a-Lago Accord” scenario, in which the U.S. intentionally weakens the dollar to support domestic manufacturing and economic stability—similar to the 1985 Plaza Accord, which saw a 48% drop in the dollar over two years. In such a case, Shah predicts gold could spike to $5,080 per ounce or higher, as market turbulence and debt concerns drive investors toward defensive assets.
While acknowledging a possible bear case of $2,700 per ounce, Shah emphasizes that downside risk appears limited in today’s environment. “The balance of risks still points upward. Even the weaker scenarios don’t show a steep drop. Gold remains an essential strategic asset,” he said.
