Many investors may have been frustrated by the months-long consolidation of the gold price, even though it occurred at a high level. But the wait now seems to be over – and gold is beginning its breakout towards $4,000 per ounce, as analysts explain.
The experts at MarketGauge.com had already stated in an interview with Kitco News last week that they expected an immediate rise in the gold price above $3,500. And that has now materialized. They also point out that, from a technical perspective, a price breakout is usually stronger the longer the preceding consolidation lasted – and therefore now consider a rise of the yellow metal to $3,800 to $4,000 possible!
However, initial profit-taking is anticipated then. But this does not necessarily mean that investors have missed the boat. Because, the analysts continued, if investors were to start buying into the price strength – i.e., buying such a breakout – parabolic movements could occur.
Gold on the Verge of a “Parabolic” Rise?
According to MarketGauge, the new momentum in the gold price was triggered by the emerging shift in the US Federal Reserve’s stance on its monetary policy. This was recently evident in the statements of Fed Chair Jerome Powell in Jackson Hole. It became clear that Powell was not overly concerned with bringing inflation back down to 2.0%, but that for the top central banker, the slowdown of the US economy and the labor market were now the focus.
This possible shift towards a looser monetary policy is leading to increasing concerns regarding the purchasing power of the US currency, the experts continued. In their view, it is becoming apparent that global investors and nations are losing confidence in the US dollar and would turn back to gold as a world currency. It is almost a flight to gold, they added.
Silver Remains more Volatile
Regarding silver, analysts observe higher volatility and already some profit-taking, after gold’s little brother surpassed the $40 per ounce mark.
However, they continue to see silver as an attractive investment opportunity and expect that this industrial metal will outperform gold into the new year. Here, the gold:silver ratio is crucial, which currently sees initial support at 86 points. However, MarketGauge assumes that this value will fall below 80 points, which could push the silver price to more than $50 per ounce and new all-time highs.
Especially since, according to analysts, silver has become a crucial element in the global energy transition. The metal is used particularly in the production of solar cells.
On a relative basis, silver is now cheap given the rise in gold prices, and $50 per ounce, they are convinced, should be easily achievable.
