Gold Is Surging. Here’s Why I’m Trimming.

Back in September 2024, I wrote an article titled “Is the Recent Rise in Gold a Trap?” At that time, I laid out a case for a strong rally in gold, even putting forward an aggressive target of $4,600 per ounce. That call was based on historical rally patterns, inflation-adjusted valuation metrics, and macroeconomic tailwinds.

Now, with gold having surged significantly since then — and approaching 70% of that upside target — I believe it’s time to prepare to start trimming exposure.

This isn’t a call to exit gold entirely. But if you’ve benefited from the rally, this is a prudent time to take partial profits — perhaps trimming 30% of your position — and reassess the risk/reward setup.

Why I Made the Call

In September, gold looked relatively cheap when adjusted for inflation. Historical analogues showed that similar uptrends had the potential to reach levels around $4,600. These rallies weren’t short-lived; they unfolded over extended timeframes and were driven by structural tailwinds — many of which are still in place today.

Among them:

• Exploding federal deficits
• Elevated geopolitical risks
• A weakening U.S. dollar
• Surging demand for hard assets as fiat uncertainty rises
• The re-emergence of tariffs as a central economic policy tool

We now find ourselves in a situation where gold has attracted strong volume, momentum has just begun to turn exponential, and macro catalysts continue to build. But these are exactly the types of moves where smart investors start watching the market closely for trimming.

Gold Could Go Parabolic — Then Snap

Make no mistake: gold is still in play. The long-term case remains intact. But when price action turns parabolic, it’s often a sign that a short- to intermediate-term speculative top could be forming. I believe we are at the beginning stages of this type of move so staying the trades continues to make sense.

This current leg higher has been fueled by increased instability:

• Tariffs and trade wars: The current administration’s aggressive use of tariffs could continue to drive capital into safe-haven assets like gold.
• Rising debt servicing costs: With Treasury yields elevated and debt rollover looming, the U.S. government’s financing costs are ballooning, which could continue to hurt the U.S dollar.
• No clear path to fiscal responsibility: Unless meaningful spending cuts materialize, deficits will likely continue to spiral.

These forces have driven gold higher — and they could push it much higher still. But they also raise the risk of a blow-off top followed by a sharp retracement — especially as analysts and economists move forecasts toward a recession.

What the Data Says Now

As of April 9, the Atlanta Fed’s GDPNow model is forecasting a -2.4% real GDP contraction for Q1 2025 (seasonally adjusted annual rate). A separate model, adjusting for gold imports and exports, pegs the figure closer to -0.3%, but either way, momentum is clearly decelerating.

Meanwhile, recession odds are rising across major forecasters:

Institution Recession Probability (Next 12 Months)

• Goldman Sachs 45% (up from 35%)
• J.P. Morgan 60%
• S&P Global 30–35%
• Morningstar 40–50%
• New York Fed 30%

The growing consensus: The U.S. economy is losing steam, and markets are responding accordingly.

How I’m Positioning Now

I’m not abandoning gold. In fact, if you don’t own any, I still think it makes sense to use bonds as a funding source to establish a position. Interest rates remain elevated, which is likely to pressure fixed income returns—and gold could continue to offer better portfolio protection in the face of macro risk.

But if you already hold gold — especially if you’ve been in since last fall — as gold rises, this may be your opportunity to take a little off the table. Rebalance. Trim. Reduce position size without walking away from the trade.

Also, while I had expected silver to outperform, it hasn’t yet lived up to that potential. Gold continues to be where capital is flowing. That may change in a second leg higher, but for now, gold remains the leader.

The Bottom Line

Gold has delivered exactly what I anticipated back in September — and then some. But the very conditions that make it attractive also justify preparing to scale back a bit. We’re in an environment where explosive price moves can unwind just as fast. The macro backdrop still supports precious metals — but the risk/reward profile has changed.

If we do get a recession, gold could push toward $4,600. But if you’re already sitting on strong gains, now might be the time to respect the parabola — and ring the register on a portion of your holding.

I'd like to hear your comments and questions.  You can also follow my on X (Twitter) @louisllanes. Happy trading!