Gold is surging to record highs amid a “currency devaluation trade”: a weaker dollar, inflation above the Fed’s target, and record inflows into gold ETFs are all driving gold prices toward $5,000. I. The US Dollar and Inflation: The Macroeconomic Logic Behind Rising Gold Prices Gold prices are benefiting from a weaker dollar, despite rising US Treasury yields. Gold ETFs are attracting billions of dollars. It's worth noting that the combination of a weaker dollar and rising US Treasury yields is historically rare—usually, rising US Treasury yields suppress gold prices because the opportunity cost of holding non-interest-bearing gold increases. The current gold price ignoring this negative factor precisely illustrates that safe-haven demand and "currency devaluation" logic have dominated market pricing, and the traditional negative correlation between yields and gold is temporarily failing. II . Currency Devaluation Trading: The Underlying Reasons for Shaking Market Confidence The dollar has recovered nearly half of the losses caused by the US Treasury's planned intervention in the bond market to control yields. Investors' skepticism about the scale and effectiveness of these measures is actually restoring confidence in the dollar. Inflation data provides further support. In July, the Personal Consumption Expenditures (PCE) price index rose 3.7% year-on-year, and the core PCE was 3.3% year-on-year. Both indicators have been significantly above the Fed's 2% target for a long time. Following the release of this data, the derivatives market has priced in a roughly 40% probability of a Fed rate hike in September. This means that if a rate hike does occur in September, it will be another unexpected shift in this tightening cycle—the market had previously widely anticipated the peak of the tightening cycle, and the PCE data undoubtedly disrupted this narrative, amplifying gold prices' sensitivity to policy paths. The White House's renewed pressure on the Fed—the government's renewed attempt to remove Lisa Cook from her position on the FOMC board, the phone conversation between Trump and Warsh, and the Treasury's recent intention to use non-market means to suppress Treasury yields—is eroding market confidence in the dollar and triggering a so-called "currency devaluation trade." In this trade, investors are shifting from currencies and bonds to assets such as precious metals. In other words, the market is no longer concerned about simple inflation, but rather about the loss of policy independence and the risk of "fiscal dominance": when the government attempts to intervene in central bank decisions and bond pricing through administrative power, the real purchasing power of fiat currencies is weakened, and the value proposition of gold as the "ultimate safe-haven asset" is strengthened accordingly. III. Funding: ETF Fund Flows Confirm Safe-Haven Trend Over the past five trading days, gold and cryptocurrency ETFs attracted a combined $7 billion, which is not surprising. Of this, $3.4 billion (nearly half) flowed into the SPDR Gold Shares ETF managed by State Street Global Advisors. Precious metals are performing strongly, taking advantage of the dollar's inability to benefit from high US Treasury yields. It's noteworthy that the concentrated influx of funds into SPDR Gold Shares, a traditional flagship product, indicates that the participants are not only speculative investors such as hedge funds, but also larger institutional funds that prioritize liquidity – this behavior of "buying physical gold and large-cap gold ETFs" is usually seen as a signal of a sustained upward trend, rather than short-term speculation. IV . Institutional View: Natixis Raises Target Price Natixis has raised its year-end 2026 gold price forecast from $4,600 per ounce to $5,000 per ounce. The bank points out that this rally even began before the US Treasury announced an increase in the minimum purchase amount of long-term bonds. The rally was driven by a series of disappointing US economic data, which altered expectations in the futures market. Previously, the derivatives market had anticipated two rounds of monetary tightening; now, even one round is being questioned. According to Natixis, the rise in gold prices is not driven by a single event, but rather by a combination of weakening economic data and a shift in policy expectations. If subsequent employment and inflation data continue to weaken and the market completely abandons expectations of interest rate hikes, the upward momentum in gold prices may be further strengthened; conversely, if persistent inflation pushes up the probability of interest rate hikes, this target price faces the risk of a pullback. V. Risk Warning: TD Securities' Calm Voice TD Securities points out that precious metals are comfortably entering a new, higher trading range, but warns against excessive optimism about the rally to historical highs. The reason is that conditions are not yet ripe. Evidence is that gold prices had already corrected before Kevin Warsh's speech at Jackson Hole. The Jackson Hole symposium is considered a key juncture for global central bank policy communication, and Warsh's remarks could directly rewrite market expectations for the Federal Reserve's policy path. TD Securities' implication is that the current rally already includes a significant premium for "policy intervention expectations," and if hawkish signals are released in speeches or intervention expectations fail to materialize, gold prices may experience a rapid pullback; chasing highs during periods of heightened sentiment does not offer a high probability of success.