In an interview with Kitco News, Bloomberg Intelligence Senior Commodity Strategist, Mike McGlone, said the path of least resistance appears to the upside in gold, as the bulls look to breach the $1900 mark.
Key quotes
“Gold is looking at a similar launchpad as in 2008 when prices breached $1,000 and began the rally which led to an all-time high level of just above $1,900.
It was the cut to zero interest rates by the Federal Reserve in December 2008 that accelerated the gold bull market to the 2011 peak. Covid-19 is a worthy catalyst to buoy gold toward its highs. That fact that the metal has reached records in most currencies leads us to expect that a similar result for dollar-denominated gold is only a matter of time.
With base rates at zero or negative, and the Federal Reserve embarking on seemingly unlimited monetary stimulus akin to 2008, we see gold extending its $1,900-an-ounce peak as the next in a stair-step recovery process.”
The quasi-currency price has a strong relationship with Fed rate expectations.
The propensity of governments to indiscriminately flush systems with cash, on the back of Covid-19 demand shocks, promises to add similar buoyancy to debt-to-GDP, along with gold.
Gold is showing divergent strength vs. the dollar, similar to the early days of the bull market at the start of the millennium … Our graphic depicts the upward-sloping 50-week averages for gold and the dollar, akin to 2001-02. When the greenback peaked about two decades ago, it was a launchpad for gold.
The extent of the Covid-19-fueled global recession and corresponding monetary stimulus are firm tailwinds for gold, and obstacles for most other commodities. We see the favorable pre-outbreak conditions in place for precious metals vs. most other assets simply accelerating.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Further weakness remains in the pipeline
AUD/USD resumed its decline and slipped back to the 0.6360-0.6350 band, or monthly troughs, on the back of the strong resumption of the bid bias around the Greenback, which was reignited following the US-China trade talks over the weekend.
USD/JPY surges as risk-on sentiment weighs on safe-haven Yen
USD/JPY is trading near 148.00 as risk-on sentiment dominates global markets following a significant breakthrough in US-China trade relations. This temporary de-escalation has sparked a rally in risky assets, weighing on traditional safe-haven currencies like the Japanese Yen.
Gold: Gains appear limited near $3,250
Gold began the week under pressure, retreating toward the $3,200 mark per troy ounce, where some support appeared to materialise. The decline followed a broader improvement in risk sentiment after encouraging developments emerged from US-China trade talks over the weekend.
SEC Chair Paul Atkins reaffirms crypto as top priority under his administration
The Securities & Exchange Commission Chair Paul Atkins spoke at the Crypto Task Force roundtable on Monday, revealing his administration's agenda to treat crypto regulations as a top priority, with a focus on token issuance, custody and trading.
Memecoins on the move: WIF, BOME, and FLOKI post double-digit gains as US-China agree on tariff reduction
Dogwifhat, Book of Meme, and FLOKI extend their double-digit rallies on Monday, adding to last week’s surge. The rally is driven by growing risk-on sentiment in crypto markets after the US and China agreed to major tariff reductions.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.