Gold Tops $3,500 As Investors Flee To Safety: Mohamed El-Erian Warns Of Global System Shift Amid Trump-Powell Tensions

Gold prices shattered the $3,500 per ounce mark on Tuesday, reaching a milestone as investors flee to safe-haven assets amid growing economic uncertainty and questions about U.S. monetary policy independence.

What Happened: The precious metal has gained more than 30% this year, demonstrating remarkable resilience despite fluctuations in interest rate expectations, benchmark yields, and inflation data. Monday’s rally pushed the SPDR Gold Trust GLD up 2.6% to $314.73.

“Gold’s ‘all-weather’ characteristic signals something that goes beyond economics, politics, and higher-frequency geopolitical developments,” wrote Mohamed El-Erian, Allianz Chief Economic Advisor, in a Financial Times opinion piece on Monday.

El-Erian highlighted consistent central bank purchases as a key driver, noting that countries are gradually diversifying reserves away from dollar dominance while exploring alternatives to the dollar-based payments system that has anchored international finance for eight decades.

Why It Matters: The rally intensified after President Donald Trump renewed criticism of Federal Reserve Chair Jerome Powell on Monday, suggesting the possibility of removing him before his term expires in 2026. These remarks raised concerns about the potential politicization of U.S. monetary policy, sending the U.S. Dollar Index to its lowest level since early 2022.

“What is at stake here is not just the erosion of the dollar’s dominant role but also a gradual change in the operation of the global system,” El-Erian warned, adding that while no single currency is poised to replace the dollar, “an increasing number of little pipes are being built to go around this core.”

The gold surge coincides with broader market turmoil, as the S&P 500 fell 2.8% to 5,158 on Monday while Bitcoin BTC/USD gained 0.72% to $88,022, mirroring gold’s momentum as investors seek alternatives to traditional currencies.

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