Home > Dynamic > Gold is up nearly 19...

Gold is up nearly 19%, and Western investors still don’t see anything?

2024-04-09

383

Robert Minter, director of investment strategy at abrdn, said in an interview that gold prices continue to hit record highs, but Western investors choose to continue to ignore gold. However, they are no longer actively hindering price increases, which means there is room for further gains from the current rally.

Robert Minter said that gold's breakout of a record high of $2,350 per ounce is just the beginning, and retail investors will soon invest in gold-backed exchange-traded funds, kicking off the next major stage of the rise.

Minter said that while investment demand (in the West) remains somewhat muted, gold investors should be thankful that at least the selling pressure has stopped.

Minter explained that since April 2022, ETF investors have sold off approximately 750 tons of gold, resulting in a large supply on the market that has met historic demand from central banks over the past two years.

Minter pointed out that central bank gold demand has not disappeared; however, as ETF selling has slowed, gold supply has dried up to a minimum. Although the pace of central bank gold purchases has slowed in recent weeks, Minter said the overall trend in official purchases remains upward.

Minter said that if you were a prudent investment manager of certain countries' central banks, you would simply diversify away from the U.S. dollar.

Minter said the broader question remains: When will Western investors embrace gold again? He expects Western investors to be waiting for the Federal Reserve to cut interest rates.

Several Fed officials expressed new insights last week, but the Fed remains somewhat coy about the start of the next easing cycle. Some members of the Monetary Policy Committee said they would be reluctant to cut interest rates as inflation continues to rise.

While the timing of the Fed's easing cycle remains a moving target, Minter said there's no question rates will have to come down.

Minter said the U.S. economy cannot afford to keep interest rates tight for much longer with credit card debt at record highs, insurance premiums rising broadly and government debt spiraling out of control.

Minter said the Fed has made enough mistakes over the past three years that I think they are very cautious not to make them again. If you are the chairman, you must know the impact of raising interest rates in a short period of time on the economy. This kind of monetary policy usually disrupts some aspect of the economy on a structural level, and you have to catch up quickly. You never risk higher unemployment to lower housing inflation by a few percentage points.

Minter said that even if the Fed keeps rates steady over the summer, he still expects to see rate cuts and the start of a new easing cycle before the end of the year.

Gold has gained nearly 19% since holding on to support at $2,000 in early February, with prices reaching a new intraday high of $2,372.50 an ounce early Monday. Minter said that even after this rally, the gold market still has significant value.

Minter said that regardless of timing or magnitude, the next change in the Fed's funding rate will be an interest rate cut, which historically has led to increases in gold prices of 57%, 235% and 69% in 2000, 2006 and 2018 respectively.

"Prices have increased by 18%, but we are still realizing it," Mingtete said.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

CM Trade

As a world leading financial trading platform, CMtrade Provides comprehensive one-stop trading services and opportunities for traders.

[Products]

The platform provides over 32 kinds of popular financial products such as forex, precious metals, crude oil, indices, cryptocurrencies and more.

[System]

2 top trading systems CM Trade MT4 / CM Trade APP, powerful and easy to operate

[Service]

Comprehensive market news, professional market analysis, 7*24 hours online customer service

[Advantage]

Low cost, high leverage, flexible one-stop all day two-way trading.

[Authority]

Licensed and strictly regulated by authorities. Traders deposits are independently kept by the bank. Fast deposit and withdrawal. Fair, efficient and transparent trading environment.

Free Access
Daily Trading Strategy Download Now

CM Trade Mobile Application

Economics Calendar

Gold is up nearly 19%, and Western investors still don’t see anything?

Access to global trading markets anytime and anywhere