Solid economic data and stubborn inflation will force the Federal Reserve to maintain its aggressive monetary policy through the summer, but that won’t stop gold prices from climbing higher, according to one European fund manager.
In a recent interview with Kitco News, Julia Khandoshko, CEO of the European brokerage firm Mind Money, said that gold’s rally to record highs is less about the actual timing of the Federal Reserve’s rate cuts and more about the general direction of monetary policy.
While Khandoshko doesn’t expect the Federal Reserve to cut rates in June, she does see two rate cuts by the end of the year and further easing in 2025, which will create a positive environment for gold.
Although the Fed’s potential easing has prompted this recent surge in gold, Khandoshko said there are other important factors, including the government’s massive debt, that are providing solid support for gold.
Khandoshko explained that the rally in the gold market is not just a speculative frenzy but a reflection of underlying economic and geopolitical realities.
“Lower interest rates are positive for gold,” she said. “But its ability to act like an alternative currency and its ability to minimize risks for investors makes it attractive. Gold prices seem really expensive right now, but the truth is, the dollar is too cheap.”
Looking ahead, Khandoshko said that she expects it’s only a matter of time before gold hits $3,000 an ounce. The bullish comments come as the precious metal continues to hold above $2,300, with June gold futures last trading at $2,313.30 an ounce, roughly flat on the day.
Khandoshko pointed out that gold has hit all-time highs even as generalist investors have ignored the precious metal. She added that gold’s next major rally will come as investors finally jump into gold-backed exchange-traded funds.
She noted that investors are still preoccupied with chasing tech stocks higher. However, she said that if the Fed delays its potential easing cycle, that could send equities lower, providing new momentum for gold as a safe-haven asset.
Source: Neils Christensen Kitco
