The precious metal has had a disappointing start to the year. Moreover, the gold price’s significant momentum in December faded last month. But one market strategist says that despite all the headwinds gold is facing, the market is still doing very well.
Gold remains above $2K despite significant headwinds
Seasonally, January is one of the best months for gold. Because prices have increased by more than 3% on average monthly over the last decade. However, there was a 0.2% decline in the market last month. Gold prices failed to make consistent gains above $2,050. Thus, it continues to consolidate in a range. However, George Milling-Stanley, chief gold strategist at State Street Global Advisors, says that although gold faces some significant headwinds, it remains well positioned as it holds critical support above $2,000.
cryptokoin.comAs you follow from , the Federal Reserve has withdrawn its aggressive easing expectations this year. Despite this, gold managed to retain critical support. The central bank continues to lay the groundwork for eventual interest rate cuts. However, markets do not expect the cycle to start in March. It’s also possible that the number of discounts will be less than the six that markets are pricing in.
“Gold will definitely benefit from this!”
George Milling-Stanley says gold investors have softened their monetary policy expectations in the last few weeks. He also notes that stock markets are very enthusiastic, with the S&P 500 breaking records. However, he argues that this momentum may prove unsustainable. In this context, the strategist makes the following assessment:
At some point, the stock market will experience a pullback. I think this is inevitable and gold will definitely benefit from it. Gold is in a very good position here. I am very happy that gold managed to stay above the $2,000 level.
Startegist: The yellow metal is doing very well!
George Milling-Stanley says the market is well supported, although gold is struggling to gain momentum. For this he cites the latest data from the World Gold Council. Milling-Stanley predicts that central bank demand and strong physical demand in over-the-counter (OTC) markets will keep gold prices well above $1,900. Based on this, he comments as follows:
As an investor, you should ask yourself: Why is the price rising when ETFs are still showing net redemptions this year? The gold price is doing very well, and that’s because some people are moving away from ETFs and into over-the-counter markets. There is no doubt about this. I think this demand will not go away and will only grow as investors finally understand what is going on.
If you keep waiting, you may miss your chance!
Milling-Stanley says that interest in gold continues despite the decline in prices. However, he notes that many investors are sitting on the sidelines, waiting for a pullback before entering the market. However, he adds, due to central bank and OTC demand, pullbacks were shallower than expected. Milling-Stanley notes that investors should focus on gold’s momentum and upside potential rather than focusing on its struggles. Finally, the strategist says:
If you look around, you’ll see that there are plenty of solid reasons for gold to fall. But it remains very stable at a very high level. This also counts as momentum. And I expect we’ll see even more of this. When you look at everything that can go wrong in the world and financial markets, it makes sense to hold some gold, and if you keep waiting for a pullback, you may miss your chance. There are many reasons why I think gold is strong and will get even stronger.
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