Gold is on the verge of an unprecedented eighth consecutive monthly gain, a streak that would mark the longest in its history. However, several headwinds are threatening to interrupt the rally.

While investors have flocked to the safe-haven metal amid macroeconomic uncertainty, market strategists warn that the run-up may be reaching a critical juncture.

Gold’s Historic Rally Faces Unprecedented Risks

Chief Economist at Moody’s Analytics, Mark Zandi, warns that financial markets feel increasingly fraught, with the elements for a meaningful selloff coming into place.

This threat, he says, is highest for stocks and corporate bonds, but even crypto, gold, and silver remain at risk despite recent pullbacks.

“Valuations are high…investors are simply investing on the faith that prices will rise quickly in the future because they have in the recent past,” Zandi stated.

The economist points to mixed economic fundamentals as a source of tension. US real GDP is growing just over 2%, below the economy’s potential of roughly 2.5%. Meanwhile, employment has flatlined, and unemployment continues creeping higher.

Inflation, measured by the Fed’s preferred consumer expenditure deflator, remains stubbornly and uncomfortably high at 3%.

Meanwhile, renewed tariff chaos and the looming threat of conflict with Iran provide little upside for risk assets.

The Treasury market adds another layer of uncertainty. Zandi warns that leveraged hedge funds have stepped into a fragile market left by a retreating Federal Reserve and global investors.

“It’s not hard to imagine them running for the proverbial door all at once, and interest rates spike,” he said.

Massive budget deficits and questions about the safe-haven status of Treasuries in a de-globalizing world exacerbate the risk.

Despite these headwinds, gold continues to attract investors as a durable store of value. Data from Kalshi shows the metal on track for its eighth straight green month.

Meanwhile, Bank of America strategist Michael Hartnett advises trading oil for short-term geopolitical gains but “owning gold” for longer-term safety.

Central banks now hold more gold than US Treasuries in reserves for the first time since 1996, reflecting their role as a hedge against fiat currency risk.

China’s Gold Shortage Sparks Supply Crunch Amid Historic Rally

China’s post-Chinese New Year gold shortage is also adding bullish momentum, though it comes with its own risks.

Reports indicate that many gold shops halted bar sales and refunded pre-holiday contracts due to severe supply constraints.

Analysts suggest this could push gold toward $10,000 per ounce in extreme scenarios, though abrupt market reactions may trigger short-term corrections.

“Extremely severe gold shortage to Send Gold to $10,000/oz soon!” Silver Trade noted.

Technical analysts remain cautious as well. Rashad Hajiyev notes resistance near $5,160. Meanwhile, FXGold Analyst highlights the critical $5,100 gap, suggesting that opening below this level could favor sellers and limit buying momentum.

In sum, while gold’s historic streak remains intact for now, investors face a delicate balancing act between soaring demand, geopolitical uncertainty, fragile markets, and key technical levels.

The combination of these factors means that the metal’s next moves may be as volatile as they are historic.

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