Front-Loading and Stockpiling: U.S. Growth Outlook Remains Firm in H1 2025

Current market volatility is being driven by sentiment-based trading around Donald Trump. Investors are struggling to form expectations, triggering a broad-based sell-off across asset classes and the U.S. dollar. This market dislocation has distorted sentiment, but investing is not about the present moment—once rationality returns, fundamentals will once again prevail. Lets be clear: there are no negative catalysts expected in Q2.

Gold briefly surged toward the $3,500/oz level yesterday before sharply reversing course. Throughout our livestreams, reports, and investor discussions, weve consistently warned that gold is a crowded trade—avoid the herd.

Much of the inflow into gold is being driven by concerns over economic stagnation and a weaker dollar. The persistent risk-off sentiment continues to elevate gold prices. But remember this market adage: when it‘s crowded, it’s time to get out.

Major investment banks have raised their gold targets, but true macroeconomic analysts will tell you that gold has decoupled from fundamentals since 2022. So whats the logic behind these revised targets？

(Chart 1: Blue – Gold Futures, Yellow – YoY Central Bank Balance Sheets, Red – U.S. 10Y Yield)

Historically, gold has moved in tandem with:

• YoY growth in global central bank balance sheets (i.e., money supply);

• The nominal yield on U.S. 10-year Treasuries.

When yields are falling and liquidity is increasing, gold prices typically rise. Thats the traditional macro setup.

Thus, gold moves positively with money supply and negatively with Treasury yields. However, this pattern broke down after inflation surged in 2022:

• 2022: Stagflation fears pushed gold higher.

• 2023: Central banks increased gold reserves, driving the bull run.

• 2024: Geopolitical tensions destabilized the dollar-based system, prompting further reserve diversification.

• 2025: Renewed recession risks and Trumps tariff policies triggered a massive squeeze in both spot and futures gold markets. U.S.-China trade tensions have again become a major bullish catalyst.

Gold has already gained over 40% this year, but price and value have diverged significantly. The tariff-driven squeeze early this year pushed U.S. gold imports sharply higher, causing the Atlanta Fed GDPNow model to project negative GDP growth and revise down PCE (Personal Consumption Expenditures) to just 0.66.



• (Chart 2: PCE Downward Revision; Source: Atlanta Fed)

As shown, by February 28, 2025, PCEs contribution to GDP dropped into negative territory. This implies weakening consumer support for economic growth.

Key Factors Behind the Consumption Slump:

• Consumer confidence deterioration: Elevated inflation and high interest rates have dampened outlooks and spending.

• Real income pressure: Wage growth hasnt kept up with inflation, eroding disposable income.

• Rising prices and borrowing costs: Inflation persists in key categories, limiting discretionary spending.

• Fed tightening effect: High interest rates have curbed auto and home loans, delaying large purchases.

• Debt burden: Higher rates have increased consumer debt service costs, particularly on credit cards.



• (Chart 3: PCE Revised as Low as -0.4%; Source: Atlanta Fed)

After Trump's 90-day tariff waiver, PCE was slashed to -0.40, with Q1 GDP revised down to -3.7%, fueling further recession fears and boosting gold.

Yet as of March, U.S. retail sales data began to reflect underlying economic resilience. PCE rebounded to 0.91%, alleviating panic. The price movements, however, still dont align with fundamentals. The early-buying and stockpiling effect is sustaining consumption, as seen in the sharp drop in net exports to -4.91.



• (Chart 4: March Retail Sales Lift PCE Back to 0.91%; Source: Atlanta Fed)

Trump‘s 90-day tariff exemption has spurred early household purchases and corporate inventory buildup. Once sentiment normalizes, we expect risk assets to stage a strong rebound, while safe-haven flows retreat. The Fed’s exit from QT and the anticipated rate cuts will set the stage for a classic buy-the-rumor, trap-the-chasers, sell-the-news cycle in gold.

Gold Technical Outlook

Gold has formed a head-and-shoulders reversal pattern, encountering resistance at the Fibonacci 38.5% level ($3,384). Yesterdays bearish candle suggests continued downside risk today. We expect further pullback.

• Short-term bias: Bearish

• Key support levels: $3,313 / $3,198

• Key resistance levels: $3,384 / $3,406 / $3,499

• Stop-loss: $25 range

• Strategy: Favor short positions on intraday rallies

Risk Disclaimer: The views, analysis, and market commentary provided herein are for informational purposes only and do not represent the official position of this platform. All investments carry risk—please trade with caution.