All the ingredients are in place for the U.S. dollar to contract in supply and rally, providing more headwinds for gold, according to Brent Johnson, CEO of Santiago Capital.
"We kind of have this perfect storm for the dollar. You've got the Trump trade policies, which...enacting tariffs means less dollars circulate. If less trade is happening, less dollars are circulating, so that restricts the supply of dollars. And you've got Powell, who's raising interest rates, not printing dollars, which a lot of people think...which is sucking dollars out of the system," Johnson told Kitco News on the sidelines of the Silver & Gold Summit in San Francisco.
Additionally, the U.S. Treasury is issuing bonds, which is equivalent to buying the existing supply of dollars from the market, Johnson said.