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Gold has been very resilient over the last several weeks. The recent range has a much narrower amplitude than those posted over the last year. There are two ways of thinking about it, observes Eoin Treacy, editor of Fuller Treacy Money.

The first is the pace of the advance has been picking up and traders are not willing to wait for a deeper pullback to buy. The second is the trend is still very consistent and a reaction of $200-$250 could still be possible.

Of course, the other point is this is the US dollar price of gold. The currency has fallen sharply over the last month, so that helped to support the gold price.

In British pounds, the price of gold has recently pulled back around GBP133 from its peak. The October-January range had a maximum drawdown of GBP160. The April-to-September range had an amplitude of GBP154.

SPDR Gold Shares (GLD) Chart

Data by YCharts

The message is quite similar. The size of the recent reaction is smaller than the last two. Since this has occurred against a background of an appreciating pound, that is good news.

It’s a similar story for the Australian dollar price. This reaction was for AUD160. The last two were AUD332 and AUD351, respectively.

When we look at gold priced in several currencies, there is no questioning that the pace of the advance has picked up. This global surge in demand for physical gold has been driven by central banks. Political volatility has increased substantially since Donald Trump took office.

The news over the last week has been filled with talk of tariffs and war. It’s easy to get caught up in the minute details of which tariff is being increased or decreased. The bigger message is more important to gold.

The US is no longer a reliable partner. That means the status quo is no more, and we are entering a new era of great power politics. That is going to have far-reaching consequences.

Gold recently paused below the big, psychological $3,000 level. Twenty years ago, $3,000 was considered an ambitious, far-away target. Today, it is upon us, and I don’t hear many people talking about a future price of $5,000 or $10,000.

I can’t tell you when those levels will be achieved, but the long-term trend of currency debasement is alive and well. That means those targets are inevitable. The only question is when.

About the Author

Eoin Treacy is a world-renowned global strategist, fund manager, consultant, author, and presenter. He is editor of the Rogue Portfolio, strategist at FullerTreacymoney, director at Nevada Trust Company, and investment director at Southbank Research.

Mr. Treacy's approach to markets incorporates a novel macro behavioral matrix and heavily features crowd psychology as a timing tool for markets. He has been regularly interviewed and quoted in Bloomberg TV, CNBC, NDTV, CCTV, and The Wall Street Journal.

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