Gold, considered both a safe haven and an inflation hedge, should thrive under current conditions. Because rallies in the precious metal tend to precede dollar declines, the prospect of a significant increase in gold prices is reason to anticipate larger moves in currencies. The escalation of conflict in the Middle East, which has lifted oil and gas prices, along with the enduring war in Ukraine and a global trade war that looks set to intensify with new U.S. tariffs, should support safer assets.

This backdrop seems ideally suited for gold, following a correction from near $5,600 to just below $4,000/oz, which has alleviated overbought conditions and reduced the number of wagers that had been restraining gold's rise. Gold is freer to rise amid an uncertain environment that has inflation worries at its heart.

The precious metal, which rose almost $3,000/oz between January 2025 and January 2026, has great potential to rise again, weighing on the dollar index, which plunged by around 15% over the same period. With speculators sitting on one of the largest-ever bets on a rising dollar, a slide led by gold now could be far more damaging for the U.S. currency.

Gold and betting


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)