Gold continues to rise ahead of expected Federal rate cuts, a policy shift traditionally known to support non-yielding assets.
As the precious metal slowly inches toward a price of $3,700 per ounce, investors are citing persistent inflation coupled with weak growth as a core driver of demand.
Similarly, the August Consumer Price Index (CPI) showed a 2.9% annual increase, a notable number given that gold has not posted a decline in over two decades in periods when inflation exceeded 2% and the Fed remained accommodative.
Economist Peter Schiff, a known gold advocate, believes the rally is likely to continue, suggesting that a price of $4,000 per ounce is easily achievable by the end of the year, a number predicted by Deutsche Bank as well on September 17.
Schiff also stated in a social media post that he expects buyers “to come rushing back in soon” as gold mining stocks are lower despite record prices per ounce, meaning that “skittish traders” will take profits ahead of the upcoming Fed rate announcement.
Gold market anxiety
While indeed promising, the rally also reflects wider market anxieties. Looking ahead, Schiff also predicted that a financial panic arising from an almost certain debt crisis could trigger draconian government action, including capital controls, nationalization of mining companies, and even confiscation of privately held gold.
As central banks weigh growth support against inflation risks, gold’s role as a trusted store of value is resonating with investors and the average person seeking stability in periods of currency debasement.
Schiff similarly predicted that the biggest victim of the fiscal turmoil would indeed be the dollar, stating in the Kitco News interview that he believes there may be some foreign exchange controls when the currency really goes “into freefall” and citizens try to get rid of it as the government attempts “to stop the bleeding.”
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Source: https://finbold.com/analyst-predicts-when-gold-might-hit-4000/
