The gold spot price hit a new all-time high on Tuesday (July 16), rising as high as US$2,469.30 per ounce.
The yellow metal has been on a record-setting run this year, buoyed by strong demand from central banks, as well as a high level of buying from retail investors in Asia. It is now up about 20 percent year-to-date.
This week’s rise came on the back of a variety of factors, including safe-haven demand after the assassination attempt on former US President Donald Trump over the weekend. Comments made on Monday (July 15) by US Federal Reserve Chair Jerome Powell also helped push gold higher — speaking at the Economic Club of Washington, DC, he said the central bank will cut interest rates before inflation hits its much-discussed 2 percent target.
June US retail sales data, which came out on Tuesday, was flat, reinforcing expectations that the Fed could make its first rate reduction in September. Gold tends to fare well when interest rates are low.
As of 5:00 p.m. PDT on Tuesday, gold was slightly lower than its record price, trading at US$2,467.25.
Next stop for gold — US$2,500 and beyond?
Gold has US$2,500 clearly in sight, but what does its price trajectory look like once it gets there?
Despite its historic run, many market participants believe the yellow metal still has further to go.
Lobo Tiggre, CEO of IndependentSpeculator.com, said he was optimistic about gold’s prospects heading into 2024, but its price increase has come without the factors that made him bullish.
‘I think clearing US$2,400 for good — trading a few weeks above that level would be key,’ he said. ‘Eventually I think we’re going to go much higher. The timing of that is always the hard part. Getting back to where I think we’re going to be at the end of this cycle, I think the gold price is going to be somewhere between US$6,000 and US$8,000.’
When will gold stocks finally move?
With the gold price historically high, market participants are hoping gold equities are next.
While the VanEck Gold Miners ETF (ARCA:GDX) and the VanEck Junior Gold Miners ETF (ARCA:GDXJ) are respectively up about 28 percent and 32 percent year-to-date, those increases haven’t overshot gold’s rise by much. Investors typically use gold stocks to get leverage on the gold price, meaning they are seeking much larger gains.
Many experts believe generalist investors will become interested in gold stocks when gold miners start to release their second quarter results in the next month or so. Gold’s 2024 price rise kicked off in earnest in Q2, meaning that it’s the first quarter where companies will see the increase reflected on their balance sheets.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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