A highly respected analysts says that higher gold prices won’t deter serious investors due to the incredibly troubling geopolitical and economic situation worldwide.
Invesco’s chief investment strategist, Kristina Hooper says that there are many drivers which are pushing gold forward, with political and economic uncertainty strong contenders. This concern trumps the prospect of rate cuts she says, meaning investors continue to flock to gold even as prices rise.
She explained, “I don’t think gold is going to flinch much if, in fact, the Fed doesn’t cut rates in June. Whether they cut in June or later in the year, interest rates are moving lower. From my perspective, there are a lot of drivers for gold, and lower down on the list are opportunity costs because rates are going to be cut.”
In line with the general consensus, Hooper says that central bank demand for gold is a prime source of price gains. With many emerging nations looking to diversify away from the dollar, the greenback has found its standing on the international stage becoming shaky, with other currencies stepping in to claim some of that market share. The result is that gold shines even brighter amid the uncertainty.
“Although there are concerns about the health of the U.S. dollar, it has not resulted in the rise of another global reserve currency, but there has been a fragmentation of the currency market, and the biproduct has been a rise in popularity for gold,” Hooper adds.
Crucially, the analyst says that there is much more to come from the current rally – meaning investors shouldn’t shy away from buying at today’s prices.
“One could say that valuations for gold are a little frothy, but we can say the same thing for the U.S. stock market. But when you look at the factors driving gold’s popularity, you can come to a very different outcome, which is that there is still a lot of upside,” she explains. “The reasons why investors are buying gold aren’t going away anytime soon. Typically, in a scenario where there are multiple reasons to buy, and demand is coming from different areas, there tend to be longer legs in these rallies.”
We have already seen gold surpass all expectations with a momentous cycle of new price records being set this spring. With much further to run and more new price highs on the table, you can’t afford to wait.
