Gold price could hit $2200 by the end of the year says one insider, indicating a move of 10% or more in the coming months.
Adam Button, chief currency strategist at Forexlive.com, was recently interviewed on Kitco News and shared his thoughts on gold and the US dollar.
Button said there’s so much enthusiasm in the markets, that gold’s recent move above $2000 before settling back down to $1900 almost feels like a loss compared to the action in equity markets.
“I think gold bulls and all market participants look around and see some of the things happening in equities, it almost feels like gold at $1900 is like a loss because it stalled out here.”
But he adds that in order for a healthy, sustainable rally in gold prices to occur, you can’t have prices rise in a straight line.
“If you think about a long-term bull market, you don’t want to see a non-stop parabolic move. You want to see these back and fill, consolidation, a few tests to the downside, and we’re getting that right now so I don’t think this is even the beginning of the end of the gold bull market. There’s so much to go here and I like the price action that we’re getting most recently.”
The host asked if this move higher in gold means a steady move lower in the US dollar, which Button agreed and said the long-term trend is a lower US dollar.
“There are so many factors if we are going to go into that in the near-term and the long-term. The main one is runaway fiscal US spending, and the second one will be easing monetary policy, and I think we are setting up for a decade of both of those things,” he adds, “Right now the driver of flows in the currency market are relative valuations. With bond yields basically bottomed out everywhere, that means the market looks more at equities, it looks more at investment, and you just see much better values outside of the US. I think there’s a lot of that money flowing out, slowly at times and quickly at times, but ultimately that’s the direction and that means lower for the US dollar in the long-term.”
Button was asked how the outcome of the election will affect gold prices, and he believes if Trump wins re-election and the Republicans hold on to the Senate, fiscal conservatism will return in gold won’t do as well.
“I think if you wake up after the election and see that Republicans have held the Senate, you would consider selling gold on that and consider heading to the sidelines for a little bit because that fiscal conservatism will come back and that limits both the economic growth in the United States but more so that runaway fiscal spending that I think is the main tailwind for gold everywhere.”
Finally, Button was asked his outlook for where gold prices will be at year-end.
“I think you get a very late tailwind in gold, now there’s that season push right into December so I think we might kind of hover around these levels on election uncertainty until then, but I think after that there’s a good chance we run up through $2000, maybe up to $2200 at year end.”