Barrick exits Canada while investors flee US assets, pushing gold to new highs
Gold prices surged past US$3,500 an ounce for the first time on Tuesday, as investor concerns over political instability in the US and central bank buying fuelled demand for safe haven assets.
According to BNN Bloomberg, although bullion later pared its gains, the rally reflects widespread unease with US fiscal policy and a broader shift away from the US dollar.
At the centre of the upheaval is US President Donald Trump’s latest attack on Federal Reserve Chair Jerome Powell.
Trump warned on social media that the economy may slow unless Powell cuts interest rates immediately, calling him “Mr. Too Late” and a “major loser.”
The post spurred a sharp reaction in financial markets, triggering a selloff in US stocks, bonds and the US dollar.
In response, investors poured into gold, Japanese yen, and Swiss franc.
According to analysts at Jefferies Financial Group Inc., gold is now seen as “the only true safe haven left” as confidence in traditional assets erodes.
Lee Liang Le of Kallanish Index Services said that gold’s 2024 rally indicates waning market confidence in the US, adding that the ‘Trump Trade’ has turned into a ‘sell America’ narrative.
Gold has risen about 32 percent this year, outperforming nearly all other major asset classes. Goldman Sachs Group Inc. has forecast bullion could reach US$4,000 an ounce by mid-2025.
Kamakshya Trivedi, global head of FX and emerging markets strategy at Goldman, said this shows a broad move to diversify out of dollar-based assets.
According to BNN Bloomberg, Martin Pradier of Veritas Investment Research said gold’s rise has been supported by both retail and institutional investors.
He attributed the rally to a weakening US dollar and growing concern about the US fiscal deficit.
Pradier said that foreign central banks such as those in China and Japan have room to increase their gold reserves further, especially if they lose confidence in the US.
Som Seif, CEO of Purpose Investments, said that “chaos is [gold’s] best friend.”
He noted that central bank purchases may have started the rally, but a broader range of investors now supports it. He also said the move to non-fiat assets shows a growing preference for alternatives to the US dollar.
Central bank buying started picking up in early 2024 as countries sought to diversify foreign exchange reserves amid geopolitical tensions and sanction risks.
More recently, bullion-backed ETFs have seen sustained inflows. Bloomberg Intelligence data show that gold, ultra-short Treasuries and low-volatility stocks received US$18bn in inflows so far in April, the highest since March 2023.
Gold ETFs saw three straight months of inflows, and the SPDR Bloomberg 1-3 Month T-Bill ETF alone took in US$8bn.
Still, gold’s momentum may face short-term resistance. Its 14-day relative-strength index recently exceeded 78, well above the 70 level that often signals an asset is overbought.
Bloomberg’s Ven Ram warned that bullion is “ripe for a correction,” though he maintained that its medium-term trajectory remains strong amid global economic distress.
Gold for immediate delivery traded at US$3,453.78 an ounce at 12:43 pm in London on Tuesday, up 0.9 percent from the previous close. Silver remained steady, while platinum and palladium advanced.
Amid the rally, gold mining stocks have also risen.
Zijin Mining Group Co. surged more than 6 percent in Hong Kong trading on Tuesday, and has gained over 25 percent this year.
Barrick Gold Corp. has responded to the rally by seeking to divest assets. The company began a sale process for its Hemlo gold mine in Ontario, its last operating mine in Canada, with Canadian Imperial Bank of Commerce managing the bids.
If successful, the sale would mark Barrick’s full exit from Canada, the country where it was founded. The company recently sold its stake in an Alaskan project to a consortium including John Paulson’s firm and Novagold Resources Inc. for US$1bn.
Paulson, who has long favoured gold, said the metal is entering “a new level of valuation.” He said the primary driver is central banks seeking to reduce reliance on paper currencies.
He expects the trend to continue, depending on political developments.
Barrick’s broader strategy aligns with other large miners such as Newmont Corp., which has raised US$4.3bn from divesting non-core assets.
Hemlo, which produced 143,000 ounces last year, accounts for about 3.5 percent of Barrick’s total annual output.
The company currently operates 13 gold and three copper mines across 18 countries, though its shares have underperformed due to rising costs and a stalled mine in Mali.
