Those who have been following the gold industry for years understand the ebbs and flows associated with its performance. With many geopolitical and economic challenges dominating the headlines, it’s no surprise that precious metals continue to draw investors’ attention. Brent Cook – a prominent analyst for the commodities and natural resources sector – has been tracking gold for the past few decades and recently shared his sentiment on the precious metal’s near-term outlook.
In an interview with Godzilla Newsz, Cook shared his opinion that while there may be some improving fundamental conditions for gold in 2024, investors should pay careful consideration to the conditions that are currently working in the gold sector. According to Cook, the biggest fundamental factors currently driving gold prices upward are the potential for inflation and a weakened U.S. dollar.
Since the start of 2020, the U.S. dollar has weakened against several major currencies, with the Japanese yen and the Euro both making significant gains against the dollar. This decline in the strength of the dollar has been attributed to the Federal Reserve’s decision to pursue a loose monetary policy in response to the ongoing economic crisis. As the dollar weakens, investors have been increasingly turning to gold to hedge their portfolios against currency depreciation.
Additionally, Cook believes that there is potential for a significant increase in inflation in the near future. With the Federal Reserve’s balance sheet currently at an all-time high, there is the potential for this money supply to be suddenly released into the economy, which could cause a dramatic spike in inflation. Gold, which is often seen as a hedge against inflation, could experience a massive surge in demand as investors purchase the metal to protect their purchasing power.
Overall, Cook believes that the near-term outlook for gold is indeed positive, supported by favorable fundamentals. Although the precious metal will not likely experience a “big rally” in the near future, due to short-term technical issues, it is certainly worth investors’ attention considering the current market conditions. By staying aware of the macroeconomic forces at play and maintaining a diversified portfolio that includes gold, investors can take advantage of potentially lucrative opportunities in the market.
