tl;dr
The US dollar is losing its status as the primary "flight-to-safety" asset, with investors increasingly turning to gold, which has reached record highs. Subadra Rajappa of Societe Generale notes this shift, highlighting gold's role as a hedge against uncertainty. Goldman Sachs' Samantha Dart predict...
**The Dollar’s Decline and Gold’s Rise: A New Era in Global Finance**
The US dollar, long the cornerstone of global finance, is facing a reckoning. Subadra Rajappa, a strategist at Societe Generale, argues that the greenback is losing its status as the ultimate “flight-to-safety” asset. Instead, investors are flocking to gold, which has surged to record highs as the dollar weakens. “The rise in gold versus the dollar not doing as much is telling,” Rajappa told CNBC. “Your flight-to-safety asset is now gold. It’s not the dollar.”
This shift isn’t just about sentiment—it’s about strategy. Rajappa points to the paradox of a weakening dollar buoying equities, asking: *What happens next?* Gold, it seems, is the answer. The precious metal’s recent climb—over $1,000 since January—signals a growing preference for assets that hedge against uncertainty.
Goldman Sachs analysts aren’t just observers; they’re bullish. Samantha Dart, an analyst at the firm, predicts gold could hit $5,000 per ounce by 2026 if the Federal Reserve’s independence is compromised. “A small shift in investment flows could trigger a 36% jump,” she notes, citing a hypothetical 1% reallocation from US Treasury markets to gold. That scenario, she says, would push prices near $5,000—a level once deemed unthinkable.
The trend isn’t confined to private investors. Central banks are also diversifying. JPMorgan’s Meera Chandan reveals that the USD’s share in global reserves has fallen below 60%, a two-decade low. This “de-dollarization” risk underscores a broader shift: nations are hedging against US monetary policy by stacking gold.
What does this mean for the future? If the dollar’s dominance wanes, gold’s role as both a hedge and a store of value could expand. For investors, it’s a reminder that markets are ever-evolving. As Rajappa puts it, “The question isn’t just about where the dollar is today, but where it’s headed.”
Gold’s ascent isn’t just a story of price movements—it’s a reflection of a changing financial landscape. Will the dollar rebound, or is this the dawn of a new era where gold reigns? The answer, like the markets themselves, remains fluid.