World gold will soon surpass the 3,000 USD/ounce mark
In an interview with the Financial Post on Wednesday, Dylan Smith was asked if he believed the gold rally could continue given the precious metal’s rapid rise. He replied that gold is actually experiencing two separate rallies, each with its own momentum, which means the next phase of the bull market is just beginning.
“I think we’ve seen a lot of gold in the past week since the Fed cut rates by 50 basis points,” Smith said. “But I think the big thing that’s happening in the gold market is that there’s been a big shift in what’s driving the precious metal compared to the past. So I think there’s more to come.”
Smith said Rosenberg Research has held a price target of $3,000 an ounce or higher for some time now and they don't see much risk of a correction. In fact, they see more momentum coming.
“The rally in early 2024, and then the recent rally, gold has had two separate rallies of 14% to 15%. The drivers that we saw at the start of the year were huge central bank demand. So far, that demand is still there and still supporting gold prices.
We see a lot of cautious demand from emerging markets where the risk of de-dollarization is quite real. We see important jewelry markets like India seeing huge income growth; we also see places like Turkey where inflation is very, very high. All of this is creating a real fundamental driver for gold prices.
But what we pointed out a few months ago is that the old dynamics of gold, the dollar and US interest rates have not really kicked in. As the easing cycle becomes more widely accepted and the pace of that easing cycle becomes clearer, we will see another move higher in gold. That is what has been happening leading up to and throughout the Fed rate cuts.”
When asked when he expects gold prices to hit $3,000 an ounce, Smith declined to give a specific time frame but said it would happen soon.
Should you buy when gold prices are too high?
Smith noted that traditional gold ETFs have turned from net selling to net buying over the past three months. “Even though they’re only up about 3%, the point is that they’ve turned the corner. That means investors are starting to realize that gold is going to be an important part of their portfolios. We’re going to have more economic uncertainty, which will fuel a new rally in gold prices,” he said.
Industrial gold demand has been weak recently, but is starting to recover, Smith added.
Smith was also asked about the persistent challenges in the mining sector, which has yet to fully benefit from the gold rally. He said profitability is also improving.
“I think now is definitely not the time to stay away from gold, even with the recent strong rally. Now is the time to buy, gold has the potential to rise. The escalation of geopolitical tensions will cause more people to start adding gold to their portfolios. I won’t give you an exact time frame, but I think it won’t be long before gold goes above $3,000 an ounce.”
Smith said the traditional inverse relationship between the US dollar and gold would also be a key factor in driving gold prices above $3,000 an ounce.
World gold prices continued to rise after recent outstanding trading sessions. The overnight spot gold price reached a new record high of 2,670.6 USD/ounce. At the time of writing (9:50 am, September 26 - Vietnam time), the world gold price listed on Kitco was at 2,657.5 USD/ounce.
In recent sessions, the price of gold rings has often fluctuated in the same direction as the world market. Investors can refer to the world market and the opinions of experts before making investment decisions. However, the opinions of experts are for reference only, the price of gold can fluctuate depending on many factors in the market, at different times.
