The anchor underpinning trust in the U.S. monetary system, that is the confidence in the Federal Reserve’s ability to keep consumer price changes on track, is facing its most severe test in decades, as inflation expectations spiral.
Investors appear to be running out of patience, pouring capital into the one asset that has historically acted like a magnet during moments of economic uncertainty and when the anchor of price stability shows signs of corrosion.
Gold prices – as tracked by the SPDR Gold Trust (NYSE:GLD) – are rising with unrelenting force, smashing historical records week after week, just as consumer inflation fears experience their sharpest surge in more than three decades.
Is Gold Sending A Warning Signal?
According to the latest data from the University of Michigan’s consumer sentiment survey, 5- to 10-year inflation expectations jumped to 4.1%—a level unseen since 1993.
That’s a stark divergence from the 20-year average of about 3%. Meanwhile, one-year inflation expectations surged to 5.0% from 2.6% just three months ago, as consumers and producers alike face the brunt of higher costs and persistent supply chain disruptions, compounded in part by President Donald Trump‘s tariffs.
“The spike in long-term inflation expectations is really quite shocking,” said Robin Brooks, senior fellow at the Brookings Institution and former chief economist at the Institute of International Finance, in a post on social media platform X.
The spike in inflation expectations is being fueled in part by the front-loading of imports ahead of anticipated tariff escalations, contributing to a staggering $300 billion trade deficit in just two months, according to macroeconomic research firm The Kobeissi Letter.
In February, the U.S. Core Personal Consumption Expenditures (PCE) price index—the Federal Reserve’s preferred inflation gauge—rose 2.8% year over year, slightly above expectations of 2.7%, undermining hopes of imminent rate cuts from the Fed.
Combined with deteriorating consumer sentiment, this backdrop has some analysts warning about a potential stagflationary environment—where stagnant growth meets persistently high inflation.
Longtime gold bull and economist Peter Schiff wrote on X, “Despite constant media hype and the Trump Administration establishing a Bitcoin (CRYPTO: BTC) Strategic Reserve, Bitcoin is down 11% YTD. Gold is up 18% YTD. Get a clue HODLers.”
The anonymous derivatives investor known as Heisenberg (@Mr_Derivatives) wrote on X: “Gold is sending a clear message that everything is NOT ok. To see it go up every day and entering a parabolic phase… my spidey tingles.”
Gold Patterns Flash Bullish Signals
Whether investors focus on technical patterns, macro fundamentals or seasonal trends, gold is radiating strength from every possible angle.
Technically, gold’s rally has entered a parabolic phase. Ole Hansen, head of commodity strategy at Saxo Bank, noted that a “cup-and-handle formation that took 13 years to develop has seen its target reached within one year. Truly amazing run.”
Data revealed Friday by Bank of America’s chief investment strategist Michael Hartnett shows gold-related investment products saw a record $3.2 billion inflow during the week ending March 21, the largest on record, reflecting a rapid repositioning by investors as inflation fears intensify.
Goldman Sachs analyst Daan Struyven said that in “tail-risk scenarios,” if fears about the Federal Reserve’s independence or the U.S. dollar’s reserve status escalate, central bank demand for gold could surge to 110 tonnes per month.
“[With] ETF holdings to rebound to pandemic-era levels by end-2025, and positioning to reach the top of its historical range, gold could plausibly trade above $4,200/toz by end-2025 and exceed $4,500/toz within the next 12 months. We view this as a very low-probability event, but include it to illustrate the nonlinear upside to gold prices,” Goldman Sachs said.
Seasonality could also be a tailwind. According to data analytics firm Seasonality.ai, gold tends to rally between April 1 and April 13, with a 100% win rate over the past 10 years during this specific window.
The average return in that period has been 2.8%, adding yet another bullish layer to the metal’s short-term outlook.
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