CashNews.co
Gold (GC=F) continues to hit record highs ahead of a U.S. presidential election where Vice-President Kamala Harris and former president Donald Trump are locked in a tight race days before Nov. 5. Sprott Asset Management sees the classic safe-haven asset entering a “new bullish phase,” regardless of the outcome.
In 2024, gold futures have broken record after record, climbing about 34 per cent year-to-date. According to Toronto-based Sprott, gold’s third-quarter return was 13.23 per cent, enough to rank the three-month period among the top five strongest for the precious metal since 1990.
Sprott market strategist Paul Wong says it’s tough to pinpoint a single cause of the persistent run-up in prices. He refers to a combination of factors, including purchases by central banks at the highest level since the late 1990s, soaring U.S. debt, a dizzying level of geopolitical uncertainty, and the looming U.S. presidential election.
“It’s a very complicated picture,” he told Yahoo Finance Canada. “The general trend is, it’s going higher. The best tell is the price action.”
While it generates no yield, investors have long turned to gold as a safe-haven investment in times of upheaval and war. Wong says the yellow metal is among the few assets available these days for such purposes. U.S. government debt has long been considered another one.
“The bond market, because of persistent inflation, persistent high debt and deficit spending, et cetera, is starting to lose its safe-haven status,” Wong said.
“The world is riskier than it was,” he added. “There’s definitely a shortage of safe havens. Geopolitically, things are getting worse. The [U.S.] debt situation is going to get worse. It seems like a pretty good time for gold.”
U.S. federal government debt topped a record-setting US$35.7 trillion at the end of its 2023 fiscal year, which concluded Sept. 30. Meanwhile, Russia’s war against Ukraine and the ongoing conflict in the Middle East are upping gold’s appeal, with no clear path to peace evident in either conflict.
“It seems like geopolitical tensions are at one of the highest levels I’ve recognized in the last 20 years,” Blue Line Futures chief market strategist Phil Streible told Yahoo Finance last Monday.
Streible sees gold hitting US$2,850 per ounce by the end of the year. Wong’s latest research includes a target range of between US$3,000 and US$3,200.
When it comes to the U.S. election, Wong says it’s unclear at this point which administration is more bullish for gold. He calls available details about Trump’s policy trajectory “incoherent at best.”