In early 2026, the price of gold surged nearly 30% in a very short time.
This move was not driven by technical charts, but by a crisis of confidence in the system.
At the time, markets believed that:
Donald Trump returning to power could threaten
the independence of the U.S. Federal Reserve (Fed)
interest rates would be cut
easy money policies would return
and the U.S. dollar would weaken
๐ When the dollar weakens, gold typically rises.
That fear-driven narrative pushed investors aggressively into gold.
๐ป So Why Did Gold Suddenly Drop 16%?
This decline was not a normal pullback.
it was a shift in confidence.
Hereโs why
Trump unexpectedly changed direction
Instead of appointing a dovish figure like Kevin Hassett,
markets saw a pivot toward Kevin Warsh, known for a much tighter monetary stance
Jerome Powell resisted political pressure and refused to cut rates
The Fed continued to make decisions based on data, not politics
๐ As a result:
Confidence returned to the Federal Reserve
The U.S. dollar strengthened
Gold was no longer needed as a โfear hedge
Outcome:
โก๏ธ A sharp gold correction of โ16%
๐ง The Core Insight
Gold doesnโt move on headlines.
It moves on systemic confidence.
Strong USD โ pressure on gold
Weak USD โ gold rallies quickly
๐ Why Does Global Capital Still Choose the USD?
The article compares the U.S. system with Chinaโs.
United States:
Independent central bank
Limited political interference
High transparency
China:
No independent central bank
High political intervention risk
Limited transparency
๐ This is why global capital still trusts and chooses the U.S. dollar.
๐ Conclusion
When confidence in the USD returns โ gold corrects
When confidence in the USD breaks โ gold rebounds fast
Right now, the most critical factors in the market are:
Fed independence and USD credibility
Choosing the wrong side in this phase can be extremely costly for traders.
