Gold prices crash 18% as US dollar surges amid shifting economic tides

Recent market shifts have brought sharp changes to gold prices and currency trends. A new report from TBC Capital highlights volatility in both areas, with gold experiencing steep declines and the US dollar gaining strength. Meanwhile, Georgia's economic ties with the European Union are shaping local borrowing strategies.

Gold prices have seen dramatic swings since the start of the Russia-Ukraine war in 2022. Initially, they climbed by 15% as investors sought safety. But US interest rate hikes soon reversed the trend, pushing prices down by 15–18%. By early 2024, uncertainty drove gold to record highs above $5,600 per ounce. Yet within two years, prices plunged over 18%, falling below $4,200 by early 2026. The drop was fuelled by inflation concerns, soaring energy costs, a strong US dollar, and fading expectations of rate cuts, with weekly losses reaching up to 7%.

The US dollar has strengthened globally over the past month, though its traditional safe-haven role has weakened. TBC Capital notes that structural factors still work against the dollar in the medium to long term. At the same time, the euro is expected to gain ground once geopolitical tensions ease. For Georgia, economic cycles now align more closely with the European Union than with the US. The Georgian lari has shown greater stability against the euro than the dollar over time. As a result, TBC Capital's optimal financing strategy favours euro-denominated borrowing for most cases. However, the report stresses that the best loan structure still depends on individual financial situations.

Gold's sharp decline reflects broader economic pressures rather than renewed safe-haven demand. The US dollar's recent strength contrasts with its long-term challenges, while the euro may benefit from reduced geopolitical risks. In Georgia, these trends reinforce the appeal of euro-based loans, though tailored financial planning remains key.