Gold prices have exceeded $5000\/oz and silver is above $100\/oz. Recent trends show a shift towards material assets, with a narrative centred on de-Dollarisation and reducing American holdings.<\/p>\n
Despite this asset shift, demand in US Treasury auctions remains strong. Additionally, data from SWIFT indicates an increase in the US Dollar’s usage in global payments, primarily at the Euro’s expense.<\/p>\n
With gold now firmly above $5,000, we see the market as over-extended in the short term. Implied volatility on gold options has reached levels not seen since the 2025 rally, making outright buying expensive. Consider selling covered calls against physical holdings to capture this premium or buying protective puts to hedge against a sharp correction.<\/p>\n
The de-dollarization narrative is loud, but the data tells a different story. SWIFT data for December 2025 showed the dollar’s share of global payments actually rose to 48%, primarily at the expense of the Euro which fell to 21%. This disconnect suggests that long dollar positions, particularly against the Euro, remain a compelling trade.<\/p>\n
We see a similar contradiction in the bond market, where the ‘sell America’ crowd is being ignored. The most recent 10-year Treasury auction was met with a bid-to-cover ratio of 2.6, showing deep institutional demand for US debt despite the rhetoric. This strength suggests the dollar\u2019s safe-haven status is far from broken, creating opportunities to fade anti-USD sentiment.<\/p>\n
Looking back, the surge in precious metals was driven by the record central bank gold buying we witnessed throughout 2025, which dwarfed even the high levels seen in 2022 and 2023. This created a powerful trend, but the underlying strength of the dollar’s plumbing means we should be cautious about chasing this gold rally further. The smart play is to trade the divergence between market narrative and financial reality.<\/p>\n
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