Gold (GC=F) has been on a tear driven by geopolitical tensions and the bullion’s safe-haven appeal. Citigroup (C) is the latest in a lineup of Wall Street banks to upgrade its forecasts for the precious metal’s price. Sprott Asset Management CEO John Ciampaglia and GraniteShares founder and CEO Will Rhind join Market Domination to discuss the primary drivers of gold’s rise and future directions for the commodity.
On the magnitude of gold’s strength, Ciampaglia states gold exited its slumber late last year after the Fed signaled a "pivot" was underway, a positive for gold as it competes with interest-bearing investments. Another key factor, Ciampaglia adds, is buying by central banks seeking to diversify away from US dollars as part of their overall foreign exchange mix. China is the leader in this particular de-dollarization strategy, Ciampaglia says, with Turkey, Singapore, and India following suit.
Noting gold’s strength amid macro factors, Rhind believes gold could hit $3,000 per ounce if there is further unrest in the Middle East. The GraniteShares founder advises investors to play gold through its ETF for direct price exposure. Gold has unique attributes as a safe-haven asset, Ciampaglia says, balancing against traditional stocks and bonds during times of unrest.
Institutional investment in gold is lower at the moment, Ciampaglia adds, but if those dollars begin to enter the market, the commodity could be pushed to "new highs." The other "missing piece" in the gold market, Rhind says, is a "fear premium" that pushed the market to the highs observed in 2020.
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