Further reason to buy now before this week’s window to buy slams shut comes in the form of the latest briefing note from Bloomberg Intelligence which this week declared that gold prices are on the cusp of a major leap forwards.
Senior commodity strategist Mike McGlone described trading around the £1,477 ($1,800) as the floor for lower prices. Bloomberg says that gold is about to rocket past £1,642 ($2,000) price levels and once that happens, new highs will become the norm.
McGlone said, “Gold is near a bottom and on the cusp of a pretty significant breakout — when it gets above £1,642 ($2,000) an ounce and never looks back. One day, we’re going to wake up, and gold is going to pop above $2,000 an ounce, which is resistance that will be converted into support, and never look back.”
He says that the strong US dollar we are seeing this week, which has pegged back gold prices, is a temporary situation, underlining the urgent need to move fast and benefit from current lower prices. “The dollar strength is putting pressure on the price of gold in terms of the U.S dollar. In terms of the yen, gold is up 20%,” he explained. “In terms of the Euro, gold is up 15%. In terms of the U.S. dollar, it’s flat.
“So people holding gold in Europe and Japan are performing much better. It’s been a good hedge against their currency declining. It’s just a matter of time before but catches up in the U.S. dollar. But once you reduce that headwind, which I think we’re on the cusp of, gold should take off, and that’s just based on past performance.”
The Federal Reserve will be key in sending prices soaring, with it forced to take action in order to bring the economy back to an even keel and tamper down inflation.
“We’re at that point where the stock market going down is enough to help take the Fed’s tightening out of the market and alleviate inflation and shift us back over to a deflationary environment, McGlone added. “That’s been some of the best foundation for gold in the last few years when gold bottomed in 2015 and 2018.”
