After falling to its lowest level in two months last week, gold prices have been showing signs of recovery, with alarming headlines related to the Russia-Ukraine conflict increasing the likelihood of prices rising to historic highs by the end of the year.
However, one analyst stated that investors should avoid chasing large fluctuations and instead take advantage of price pullbacks to buy, as he expects gold prices could climb to $3000 per ounce next year.
Peter Spina, president and founder of gold news and information provider GoldSeek.com, recently commented that Trump's victory led to a temporary shrinkage of the geopolitical premium on gold prices, but with two months until Trump takes office, the U.S. approval of Ukraine's use of long-range missiles against Russia is viewed as a 'serious escalation of the situation,' which again supports the price of the precious metal.
He said, 'This is a very dangerous situation... If the situation does not de-escalate quickly, this should support gold prices.'
On Wednesday, Reuters cited five sources familiar with the Kremlin's thoughts saying that Russian President Putin may be willing to negotiate with Trump on a ceasefire in Ukraine. Despite this, gold prices rose for the third consecutive trading day that day.
Spina noted that as gold becomes oversold, the return of the geopolitical premium allows it to record a decent rebound even against a strong dollar.
He also believes that the long-term trend for gold remains positive, including de-dollarization and strong purchases by central banks. Therefore, aside from the impact of short-term events, gold has actually begun a 'consolidation phase lasting several weeks.'
Spina stated that if this situation continues, gold prices seem likely to reach '$3000' by mid-next year, 'but the uncertainty of the current situation in Europe makes timing uncertain.'
He pointed out that if Russia actively advances offensively in Ukraine and escalates the conflict, 'this will drive gold prices significantly higher.'
Spina said, 'There is a lot of uncertainty about what will happen next,' adding that he still 'hopes that the possibility of a larger conflict is only a short-term fear that will ease as we enter January next year.'
He stated that for the time being, investors are best advised 'not to chase large fluctuations and to consider the coming weeks as a window period when gold prices approach $2500 rather than $3000, the latter of which may make gold appear more expensive in the short term.'
Spina added, 'The gold bull market will develop into a larger cycle, with gold prices significantly rising over the next few years. This is a multi-year bull market, so pullbacks still present an opportunity to build valuable protective exposure in a world full of uncertainty and distrust.'
He said that a gold price of $3000 will 'look very cheap' in three to four years.
Article reposted from: Jin Shi Data