According to Amundi SA - Europe's largest asset management company, gold prices can completely continue to accelerate as the increasing "isolation" of the US from traditional partners causes investors to cut their holdings in USD and shift strongly to gold.
Vincent Mortier - Investment Director of Amundi - said on Bloomberg TV that the trend of escaping the USD comes not only from geopolitical tensions but also from the US's large budget deficit and uncertainty surrounding the future policy of the US Federal Reserve (Fed).
We have increased the proportion of gold over the past two and a half years, and this momentum may continue. In the long term, gold has always been a defensive hedge against currency devaluation risks and a very effective purchasing power hedge," Mortier emphasized.
Gold prices moved towards a seven-session winning streak on Tuesday, after surpassing $5,000/ounce for the first time at the beginning of the week. In just 12 months, gold has risen by 85%, while Bloomberg's USD index fell 8.5%.
Mortier said that most of the demand comes from the group of institutional investors, including central banks and the national asset fund. Amundi currently manages about 2.3 trillion euros (2.7 trillion USD).
He further warned that President Donald Trump's handling of relations with allies - from the latest confrontation with Europe regarding Greenland to repeated tax threats - is causing long-term damage.
We cannot continue to put pressure on allies in that way. New links are being formed. Europe's stance on Greenland is a clear example, showing that under pressure, they will find new ways to resist," he said.
Last week at the World Economic Forum in Davos, Canadian Prime Minister Mark Carney also called on middle-income countries to coordinate actions, sending a strong message against the coercion of major powers.
According to Mortier, at the present time, there is almost no major currency option attractive enough to replace the USD.
Today, you can hardly want to buy the euro; with the yuan it is too early; the yen is under pressure. So the most reasonable replacement at this time is gold" - he said - "And we have seen that very clearly through customer behavior".
