cryptocoin.com As we reported, gold rallied above $2,000 this week, with prices adding a certain degree of geopolitical uncertainty. According to analyst Gary Wagner, the upward move in the price of gold probably would not have been as strong if there had been no war in Ukraine.
Gary Wagner: Inflationary pressures dominant driver of gold
The analyst says that while the uncertainties brought about by the war in Eastern Europe contributed to the increase in the demand for safe-haven, underlying inflationary pressures were the dominant driver of gold. According to the analyst, the gold price was trending bullish throughout 2022 even before Russian forces invaded Ukraine. Gary Wagner states that strong safe-haven demand has driven gold and the US dollar to rise repeatedly throughout February. He makes the following assessment:
With the escalating geopolitical tension out there and the side-effect of this causing stocks to drop significantly, gold is definitely the safe-haven of choice. But so is the US dollar, and so when you typically have an inverse correlation between the dollar and gold prices, you’ll move the two higher together.
What is the long-term forecast for the gold price?
Gold’s latest move was phenomenal, and Gary Wagner says he’s seen something this dramatic only a few times in his career. “This is the third time I’ve seen such movements in gold,” the analyst says, adding that the first was in mid-2011, when gold reached $1,920, a record level for that time. The second time he saw such action occurred just before August 2020, and of course that was when gold hit a new record high of $2,088. Saying “This is the third event,” the analyst uses the following expressions:
What I’ve never seen is the kind of intraday volatility we see. On February 25, when Russia invaded Ukraine, we saw gold trade from high to low in the $100 price range. That’s an enormous range for one day.
Gary Wagner says that the outcome of the war in Ukraine will directly determine the price of gold. In this context, the analyst also shares his long-term forecasts:
What I’m considering for a long-term forecast is actually a truce or peace. In this case, we can see gold pull back. For example, we can see it going to $1,952. From there, inflationary pressures will eventually push gold above $2,000 to $2,100 by the end of the year.
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