When it comes to connecting the market’s behavior across different assets, little gets it done, like inflation rates or expectations moving forward. Today, as President Trump's rollout of trade tariffs has caused a major expectation for higher inflation, capital has started to rotate according to these expectations, and it clearly shows in the price action.
Any time investors, in a broader sense, expect inflation to start coming up, gold then becomes the go-to asset in the commodities space to see increased attention, which comes along with buying interest. Knowing this, investors can make sense of the precious metal making new all-time highs nearly every week since the trade tariffs were announced. However, there are some fears that gold is now slowly becoming overextended, making other areas more attractive.
