'Biggest defeat since Vietnam': why David Woo says the AI bubble, not Iran, is the real threat to the dollar

• Woo calls any dip to $4,000/oz a buying opportunity for long-term gold investors, noting central banks bought 863 tonnes in 2025, the fourth consecutive year of elevated official-sector demand
• The dollar's strength relies on global AI demand requiring U.S. technology purchases, but this support is threatened by U.S. export restrictions on advanced models and cheaper Chinese competition squeezing both ends of the market
• U.S. federal debt has surged to roughly $39 trillion as of spring 2026, with net interest payments projected to exceed $1 trillion in fiscal 2026, now larger than Medicare or defense spending

Summary: David Woo Warns AI Bubble Poses Greater Dollar Threat Than Iran Deal

Former Bank of America global rates and currency research chief David Woo argues that the AI bubble, not geopolitical tensions, represents the primary threat to the U.S. dollar. Speaking to Kitco News, Woo called the recent U.S.-Iran deal to reopen the Strait of Hormuz "the biggest single defeat by the United States since the Vietnam War" and "a complete capitulation," warning that it signals the passage of U.S. hegemony.

Key Market Developments:

• Gold climbed 2.8% Monday to $4,339/ounce, up 28% year-over-year despite a 5% monthly decline
• Gold set 53 record highs in 2025, with annual demand exceeding 5,000 tonnes for the first time
• Central banks purchased 863 tonnes in 2025, the fourth consecutive year of elevated buying
• Gold recently surpassed U.S. Treasuries as the world's largest reserve asset by value

Core Thesis:

Woo contends the dollar's strength is artificially supported by global demand for American AI technology. "If this AI bubble were to burst, the dollar's toast," he stated. He believes the bubble faces pressure from both U.S. export restrictions on advanced AI models and competition from cheaper Chinese alternatives.

Investment Outlook:

Woo identified buying opportunities for gold around $4,000/ounce for long-term holders. He projects gold could reach $10,000 if the AI trade unravels, triggering recession and zero interest rates. He attributes gold's recent weakness to Gulf oil producers liquidating holdings for cash when unable to export crude.

Fiscal Context:

U.S. federal debt has reached approximately $39 trillion as of spring 2026, with net interest payments projected to exceed $1 trillion in fiscal 2026—surpassing Medicare and defense spending.