The price of gold continues to rise sharply at the start of the new week and has once again hit a new all-time high above $3,400. The spot gold price traded at an all-time high of $3,413.84 per ounce by the close of trading on Monday (21 April), up nearly 3% on the day.
It’s worth pointing out that last week, the world’s largest gold exchange-traded fund, SPDR Gold Shares (GLD), surpassed $100 billion in assets under management (AUM) for the first time in its history, a milestone that reflects the recent buoyant performance of the gold market and continued investor demand for safe-haven assets.
Analysts at State Street Global Advisors noted that investors are increasingly turning to gold as a strategic safe haven as volatility and geopolitical uncertainty continue to drive risk aversion.
The U.S. dollar index was trading at 98.40 points, its lowest point in more than three years. Meanwhile, U.S. 10-year bond yields remained elevated above 4.4 per cent.
Analysts believe gold is still benefiting from a series of trade policies that have isolated the U.S. since Trump took office. China has cut US oil imports by 90 per cent and bought record amounts of crude from Canada. At the same time, China has increased its soybean imports from Brazil.
Within the US, Trump stated last Thursday that he wants to fire current Federal Reserve Chairman Jerome Powell as soon as possible, which has also undermined confidence in the US dollar, with some analysts saying there is room for the dollar to fall further.
Eric Strand, founder of precious metals firm AuAg Funds, recently commented to Kitco News that gold is still cheap under $4,000 an ounce in the current environment.
Actually, back in September 2024, AuAg Funds was adamant that it was bullish on gold prices rising to $4,000 per ounce. The firm argued that despite the Fed’s aggressive tightening of monetary policy leading to a significant drop in the money supply, money printing had not stopped and US debt had ballooned to over $35 trillion.
Strand explained that the only time gold was slightly overvalued was in 2011. Despite the Federal Reserve cutting interest rates to zero and launching quantitative easing for the first time in history, government debt was still relatively manageable at the time. in 2011, the U.S. debt-to-GDP ratio was about 95.5 per cent. Last year, debt was 122.3 per cent of GDP.
Considering the scale of money printing and sovereign debt, the fair value of gold is around $4,000 per ounce.
Jeffrey Gundlach, known as the ‘new debt king’ has also recently said publicly that the possibility of the U.S. economy in 2025 recession is as high as 60 per cent and the price of gold may break through the $4,000.
Gundlach said, now the global central bank holdings of gold trend is more and more obvious, this shows that everyone is seeing gold as a kind of independent of the financial system of the value of the means of storage. The current financial system is in turmoil, which is why gold will become more and more favourable among global investors.
