Gold Hits Record High Amid DeepSeek Volatility: A New Era in Investing

Gold's Record High Amid Market Volatility

At a time when the stock market has been weighed down by bearish investor sentiment regarding the impact of the DeepSeek artificial intelligence (AI) model, gold has quietly been making moves to new highs. Notably, most equities opened the new week with significant losses amid fears that the Chinese AI model's reported ability to offer impressive performance at lower costs could dampen investment in the growing sector.

Current Gold Valuation and Market Sentiment

The precious metal, on the other hand, seemingly ignored the DeepSeek volatility, targeting new highs at the $2,800 spot. As of press time, the yellow metal was valued at $2,757 per ounce, gaining almost 0.65% in the last 24 hours. In the past year, gold has rallied by over 35%. Investors will target the $2,762 resistance as a key hurdle if the current bullish level is maintained. On the downside, $2,747 is a crucial support to watch out for.

Geopolitical Factors Boosting Gold's Safe-Haven Appeal

Gold has partly gained strength amid uncertainties surrounding President Donald Trump’s proposed tariffs, which could trigger a global trade war, boosting its safe-haven appeal. Trump aims to impose tariffs on imported computer chips, pharmaceuticals, and steel to encourage U.S. production. His inflationary policies further enhance gold's appeal to cautious investors.

Gold's Unconventional Trends

Now, amid this gold price momentum, which has extended from 2024's run, analysis by the financial commentary platform The Kobeissi Letter suggested that the metal's move might be sending a message, considering it has defied historical trends. For instance, gold has maintained an upward trajectory despite significant headwinds like the U.S. Dollar hitting a 52-week high and the 10-year Treasury yield breaking above 4.80%. Traditionally, gold and the U.S. Dollar move inversely. A stronger dollar makes gold more expensive for foreign investors, typically driving prices down.

The Drivers Behind Gold's Gains

Factors likely contributing to gold's current movements include stubborn inflation in the U.S. and deflationary pressures in China. Both scenarios create global economic uncertainty, pushing investors toward safe-haven assets like gold. As the market anticipates the next Federal Reserve policy meeting, speculation around interest rate policy and its impact on broader equity market volatility has only strengthened gold's position as a hedge.