The gold market broke a record, rising above $2,450. However, it later encountered resistance and lost ground due to the hawkish sentiment of the Federal Reserve, which spooked the markets. This raised doubts about the $3,000 estimates. But gold’s rally is far from over, according to one market analyst.
When will gold prices reach 3 thousand dollars?
Maison Placements Canada Inc. John Ing, President and Chief Executive Officer of the company, confirmed the price target in his latest gold comment. Ing expects the precious metal to rise to $3,000 in the next 18 months. The Fed’s aggressive monetary policy has increased the opportunity costs of gold as a non-returning asset. However, Ing says the government’s rising debt is overshadowing current monetary policy. In this context, in a report last week, Ing makes the following assessment:
Gold’s rise above $2,400 was due, more than anything else, to the increasing debt of the United States. This caused money to flow into gold for defensive purposes. Since March, gold has risen $500 and hit all-time highs as debt monetization becomes a tool of public policy. Americans may carry a lot of debt, but as the burden increases, the sustainability of monetary and fiscal policies leaves little margin for error.
These developments will benefit gold!
John Ing warns investors that rising protectionist sentiment, led by the US, could worsen rising debt concerns and make the US dollar a “weak link” in global financial markets, which would benefit gold. Based on this, the analyst makes the following statement:
Gold is universally fungible and limited. Gold can be bought and sold in US dollars and is therefore an alternative to fiat money for central banks and investors alike, especially since gold is outside the Western-centric system. The Saudis sell oil for yuan and China has become the largest consumer. This indicates a fundamental power shift from the West to the East, with the petroyuan replacing the petrodollar.
China’s increasing appetite for gold and its effects
China’s growing appetite for gold will put further pressure on US finances, explains John Ing. Ing states that China’s US bonds fell to the lowest level in the last 14 years, at $775 billion. While the US sells bonds, the central bank buys gold. Like this, cryptokoin.comAs you follow from , China has been increasing its reserves for the last 18 months in a row. In the report, the analyst underlines the following points:
China’s diversification moves give them more options, which comes at a critical time when America needs others like China to finance its massive $34 trillion national debt, which is larger than the economies of China, Germany, Japan, India and the United Kingdom combined. It could further impact their huge holdings in Treasuries. The dollar is being used less and less as bullion makes up a larger percentage of reserves held by central banks around the world. Gold is the new critical mineral for China.
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