Tuesday, September 24, 2024

Gold's New High and What's Next

Fed Rate Cuts, Debt Levels, and Where Gold Could Go from Here
 
   
     

Gold has been on a tear lately, and if you’ve been following along, you know why.

Gold is traditionally known as a “safe haven asset” and when times get tough — or people believe times will get tough — they generally flock to gold.

Additionally, last week’s Fed rate cut gave gold a major boost. And with the Fed signaling that more rate cuts are coming down the line, only strengthens the case for gold continuing its upward trajectory.

Let’s take a closer look at what’s driving this.

First off, when the Fed cuts rates, it lowers the return on bonds and savings accounts, making assets like gold more attractive. The Fed’s recent decision to slash rates by half a point already had an impact — gold jumped in response, as we’d expect.

But here’s the kicker: The Fed has also signaled that more cuts could be coming soon, which is likely to push gold even higher.

Another piece of the puzzle is the U.S. debt. As it sits at record levels, the value of the U.S. dollar is increasingly under pressure.
 
 

And when the dollar weakens, gold tends to rise because it’s seen as a hedge against that decline. So, with these factors working in tandem — falling interest rates and a struggling dollar — gold is primed to keep climbing.

But gold isn’t doing it alone. It’s getting a significant boost from silver and copper. Silver is now approaching a key resistance level at $33.50, and if it can break through that, gold should surge past $2710. Copper is also in the mix, with its next target at $4.75.

If these metals keep rising, it’s only going to reinforce gold’s upward momentum. So, while we’re already seeing gold at a new high, there’s reason to believe the rally could be far from over.

Bottom line: As long as the Fed keeps cutting rates and the dollar weakens, the stage is set for gold to continue its run. And with silver and copper lending support, this could be just the beginning.

— Geof Smith

P.S. But you don’t need to buy and hold gold. I believe the best gains come from harnessing what I call “Gold Acceleration Cycles” — and here’s how I do it.
 
   
 
at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)

China's credit bazooka isn't what it used to be

• China's credit bazooka isn't a bazooka. • Stimulus will probably boost China's stocks for a while. • But meaningful im...