Is There Still Room To Run for Gold?

By photobc1 @ Adobe Stock

Gold prices have hit record highs in recent trading, but is there still room left for gold to rise? As you can see on my chart below, prices of gold in inflation-adjusted terms (real gold prices) are still well below the all-time highs of 1980 and haven’t even eclipsed the peak prices of 2011 or 2020.

In The Wall Street Journal, Joseph Hoppe discusses gold’s recent record-breaking (in nominal terms) run, writing:

Gold reached a new record high on rising hopes for a U.S. interest-rate cut and geopolitical tensions, rapidly reclaiming lost ground after a market crash and selloff in early August.

Continuous gold futures on the New York Mercantile Exchange rose 1.6% to $2,533.4 a troy ounce in European afternoon trading, having reached as high as $2,538.7 earlier in the session. The prior all-time futures record was $2,522.5 an ounce on Aug. 2. Meanwhile, spot gold broke above the $2,500 barrier for the first time.

The precious metal, which has repeatedly reached all-time highs since March, is riding on a global market recovery, but is particularly supported by safe-haven demand and growing rate-cut hopes, said FxPro senior market analyst Alex Kuptsikevich. Gold has moved in tandem with equities this month, but it fell less aggressively during the selloff and outpaced the wider rally, Kuptsikevich said in a note.

Early August’s market turmoil—in which gold futures sank as low as $2,403.8—now feels like a distant memory, after better-than-expected U.S. economic data eased worries of a severe downturn in the world’s largest economy, said Saxo Bank’s head of commodity strategy Ole Hansen.

The latest U.S. data also makes a good case for an interest-rate cut by the Federal Reserve next month, though it is likely to be a modest 25 basis point cut rather than the market’s previously hoped for 50 basis points, Alex Ebkarian, chief operating officer of precious metals dealer Allegiance Gold, said.

Regardless of early August’s profit-taking, investors will continue to be driven toward gold as a safe-haven asset given persistent geopolitical tensions and volatility in the market, along with the anticipated rate cut, Ebkarian added.

Buying has firmed up from sources other than financial funds, said Paul Wong, market strategist at Sprott. The U.S. dollar and yields have broken significant support levels and market deleveraging has stopped, ending any gold selling, Wong said.

Action Line: Your Survival Guy supports a return to the gold standard for America to save the dollar. When you want to talk about precious metals as a portion of your investment portfolio, I’m here. In the meantime, subscribe to my free monthly Survive & Thrive letter.

P.S. Read more about gold here:

• America Can Save the Dollar with a Gold Standard
• The Need for a Gold Standard Is Clear: Discipline
• A Return to Gold Standard Would Work Wonders
• My Pick for the Next Federal Reserve Chief: A Gold Standard
• The Post-Gold Dollar

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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