Gold market volatility increased as gold prices failed to maintain their upward momentum after hitting the resistance level of 3,500 USD/ounce. Despite strong profit-taking, a market strategist believes that the increase of this precious metal is still very solid.
In an interview with Kitco News, George Milling-Stanley - Head of Gold Strategy at State Street Global Advisors said that economic instability continues to cover the whole world, and the fear of gold continuing to hold its appeal as a safe-haven asset, even when prices are higher.
The current market does not seem to be too hot. We are living in an unprecedented period of uncertainty, and it seems that no one has a major plan to improve the situation. Depression or stagnant inflation are making gold more profitable than ever, he said.
This optimistic assessment was made when the world's largest gold ETF reached a new milestone. Along with the increase in gold prices, the SPDR Gold Shares fund (NYSE: GLD) has total assets exceeding 100 billion USD for the first time since its launch nearly 21 years ago.
Not only has the world grown strongly, Milling-Stanley also said that the SPDR Gold MiniShares fund (NYSE: GLDM) has also attracted significant capital, with assets increasing by 2.5 billion USD since the beginning of the year, bringing total assets to 14.5 billion USD.
Since the beginning of the year, global gold ETFs have attracted capital flows of $21.1 billion. However, this demand is still much lower than in 2020.
Taking 2020 as the standard, Milling-Stanley said this is a clear sign that interest in gold has not yet reached its peak.
Gold still has many opportunities to increase, and I think there is a high possibility that it will continue to increase, he said.
Not only is instability and fear making investors return to gold. Milling-Stanley also said gold is being seen as an important safe haven asset as confidence in the US economy is declining.
Reliability in the US and the US dollar has been severely affected, and I dont think it will recover anytime soon. I don't see what the government can do to recover quickly. It is difficult to imagine which scenario will make the outlook for gold deteriorate from now on, he said.
In April, State Street's gold expert team raised their 2025 gold price forecast, with the base scenario ranging from $2,800 to $3,100/ounce this year. The bullish scenario is $3,100 to $3,400 an ounce, up from previous forecasts of $2,600-2,900 and $2,9:00-3,100 an ounce.
Although Milling-Stanley still sees gold with great potential for increase, he also warned investors not to buy to chase the market.
If you are a short-term investor who buys gold because you believe that the price will increase in the near future to make a profit, then that is a quite risky view at the current price.
But if you are a long-term investor, the buying point is no longer too important. Although you have missed many buying signals, I think there is no doubt that gold can still increase from here, he said.
