The new all-time high of £1,680 set on Monday is just the beginning of what we can expect to see from gold prices in the coming months, one expert says.
Midas Touch Consulting’s managing director, Florian Grummes says the gold bulls have a clear path towards £1,990 after smashing previous price records. There are several factors supporting this prediction including a weakening of the U.S dollar, driven by soaring government debt. The troubling government balance sheet is also a force for good for the bulls and will further fuel the yellow metal’s ascent.
With two wars raging, the geopolitical situation is more unstable than ever, and this could also feed price escalation, with safe haven demand a tried and tested ignition switch for gold prices.
“[There is] quite a lot of downside now for the U.S. Dollar, mainly because the world is realizing that the debt situation in America is unsustainable,” Grummes explains. “All the statistics are now exponential. If you look at the debt levels, if you look at the interest payments that has to be done, it’s unsustainable, and I think the world is shifting now towards that view for next few months at least, so I think we’re going to see a lower dollar and that obviously will support gold.”
For the Federal Reserve, mounting debt problems are just the beginning. Their monetary policy increases the amount of interest Washington pays on its debts. This conundrum isn’t the only problem to be resolved however, as months of rate increases are finally coming home to roost with the economy now plagued with expectations of a 2024 recession.
There is growing consensus amongst economists that a slowdown is on the cards for the very near future. European asset management firm Amundi says that it expects a recession in 2024 and is negative on the dollar, according to research carried out by Reuters. Similarly, Deutsche Bank and JP Morgan also see a risk of recession.
Don’t wait for those factors to push gold prices higher than ever. Buy now.
