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Gold 3,553.38/oz
Silver 45.38/oz
Platinum 1,495.18/oz
Palladium 1,428.57/oz
Price Update

Gold Prices Set to Shine in the Medium-Term, Targeting $2,400 per Ounce

Gold Prices Set to Shine in the Medium-Term, Targeting $2,400 per Ounce
Gold Prices Set to Shine in the Medium-Term, Targeting $2,400 per Ounce

Gold prices are expected to experience a notable uptrend in the medium term, with a potential target price of $2,400 per ounce. This surge is primarily attributed to the decision made by the US Federal Reserve to halt interest rate hikes. The pause in interest rate increases has created a favourable environment for gold, as it diminishes the opportunity cost of holding non-yielding assets like precious metals.

The battle against inflation is an ongoing concern, but there are positive signs with inflation numbers showing a decrease. This is a promising development for gold investors, as the metal is often sought after as a hedge against inflation. The decreasing inflation numbers suggest that the value of gold as a store of wealth and a protection against eroding purchasing power remains intact.

Hedge funds that have bet against bonds have been impacted by the recent increase in interest rates. As interest rates rise, the value of bonds decreases, resulting in losses for those who have taken short positions. This serves as a reminder of the potential risks associated with certain investment strategies.

Geopolitical risks and conflicts continue to simmer on the global stage, and they should not be overlooked. Tensions between Russia and Ukraine, ongoing US-China politics, and issues in the Middle East have the potential to impact financial markets. Investors are advised to remain vigilant and consider the implications of these geopolitical factors on their portfolios.

While the Dow Jones Industrial Average shows signs of potentially surpassing its previous record highs, caution is advised due to the aforementioned geopolitical risks. The market’s resilience is commendable, but it is important to keep in mind the potential impact that global conflicts can have on investor sentiment and market stability.

The volatility index (VIX), often referred to as the “fear gauge,” currently indicates that there is not much fear in the market. However, financial experts recommend buying inexpensive protection options as the market approaches resistance levels. This proactive approach can help investors mitigate potential downside risks and protect their portfolios against unexpected market fluctuations.

Lower interest rates, especially if the US 10-year Treasury yield drops below 4%, could pave the way for a surge in gold prices to new all-time highs. The inverse relationship between interest rates and gold prices suggests that a decline in interest rates makes gold more attractive to investors. As a result, a drop in the US 10-year Treasury yield could provide a significant boost to the value of gold.

Renowned market expert, Rick Bensignor, president of Bensignor Investment Strategies, shares his insights on these market trends. Bensignor notes that if certain levels are achieved, the next target for gold prices is around $2,400 per ounce. He also points out the sentiment change regarding the US 10-year Treasury yield, expecting it to reach its highest point soon. 

Bensignor acknowledges the potential for the Dow Jones to break past its previous record highs while cautioning investors to remain aware of geopolitical risks and conflicts. He adds that the volatility index (VIX) is not particularly low based on long-term trends. Bensignor concludes by highlighting that lower interest rates could be a win for gold investors.

In summary, cautious optimism is advised in the current market environment. Investors should take into consideration macro risks, such as geopolitical tensions, and explore the use of options for portfolio protection. By staying informed and monitoring key market indicators, investors can navigate the dynamic landscape with confidence.