The Daily Gold Podcast: Why Gold is Steady & What Will Trigger New All-Time High
For the past three years, precious metals prices have trended sideways. Gold has flirted with $2,000 per ounce, near the highs set in the summer of 2020. That’s despite a spike in inflation over the past three years.
Typically, gold prices move in big trends measured in years. The sideways trend of the past few years stands at odds with the rally that started in the metal in 2016, when it slipped to about $1,050 per ounce.
Typically, gold rises on perceived changes in inflation. Investors who pushed the metal higher in 2020, amid government stimulus to the economy, got the trend right. However, gold prices flattened out before it could break to meaningfully new highs.
However, that may change. That’s because central banks have been increasing buyers of the metal. They’re looking to protect the purchasing power of their own currencies. And to avoid the devaluation of other countries currencies.
That demand remains strong. Plus, the lack of major new discoveries will put a damper on future supplies of gold. That could help lead to prices moving higher in time.
These two trends may also explain why gold hasn’t had a major selloff since peaking in 2020, and has remained closer to its prior highs than in prior gold cycles. Investors may want to consider an allocation to the metal before it breaks higher.