Gold rally may continue due to a weaker dollar

Gold has the potential to continue its strong appreciation, as the increasing isolation of the United States from other countries is prompting more investors to reduce exposure to dollar-denominated assets and turn to the precious metal. This was stated by Amundi SA, the largest asset manager in Europe.

According to Vincent Mortier, Chief Investment Officer at Amundi, the shift from the dollar to gold is also fueled by the large U.S. budget deficits and the uncertainty surrounding the future policy of the Federal Reserve. In an interview with Bloomberg Television, he emphasized that gold remains a reliable long-term asset for preserving purchasing power.

“We have been positioned in gold for the past two and a half years, and I believe this trend can continue, as in the long term, gold is an excellent hedge against depreciation and an effective way to preserve purchasing value,” Mortier commented.

Gold is set to record its seventh consecutive day of gains, after on Monday its price surpassed $5,000 per ounce for the first time in history. Over the past 12 months, the precious metal has appreciated by 85%, while the Bloomberg Dollar Index has lost 8.5% of its value.

A large portion of gold demand comes from institutional investors, including central banks and sovereign wealth funds, Mortier added. Amundi manages assets of around €2.3 trillion (approximately $2.7 trillion), according to company data.

According to him, the aggressive rhetoric of U.S. President Donald Trump towards traditional allies, including recent frictions with European countries over Greenland, as well as constant threats of tariffs, will have a long-term cost.

“You cannot behave like this with your allies indefinitely,” Mortier said. “New alliances are beginning to form, and Europe’s position on the Greenland issue is particularly telling,” he added.