Gold (GC=F) prices retreated late Monday morning after hitting a record high of $2,100. Investors are betting that the Federal Reserve will start cutting rates next year. Bloomberg Intelligence Senior Macro Strategist Mike McGlone says prices are trying to hold on to the $2,000 support, which used to be a price of resistance.
McGlone believes that gold purchasing will remain high, noting “the deepest pockets on the planet are buying gold. That’s central banks.” Overall, McGlone believes gold “is in the early days of a bull market.”
Watch the video to hear why McGlone says “this is not our fathers’ gold market.”
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RACHELLE AKUFFO: Gold hitting a record high this morning, touching $2,100. But since pulling back. But is another rally on the horizon as geopolitical uncertainty continues, and investors bet on future rate cuts. Mike McGlone, Bloomberg Intelligence Senior Macro Strategist, joins us now.
Good morning. Thank you for joining us. So for people who are trying to get a handle on the correlation between what we’ve seen with gold prices historically and the S&P 500 here, what does that lay out about the path ahead recession wise?
MIKE MCGLONE: Gold up, S&P 500 down, I think, is a potential trajectory for next year. The key thing right now is gold’s just kind of frustrating to those people. Made a new high.
And then, we– like, basically last night at $2,135 an ounce. And now, it’s just trying to see if it can hold that support around $2,000 an ounce. That used to be resistance. I think it will.
But I think you mentioned the key factor is if the stock market keeps going up and US interest rates stay high– and there’s not a lot of reason for gold. But I think that’s all transitioning. Now one of the things today is the market’s priced for a lot of Fed ease next year. Fed Fund futures almost a 100 basis points by this time next year, which might be more an issue for the stock market. But the way I see gold is– the deepest pockets on the planet are buying gold.
That’s central banks. Now ETFs haven’t really been much buyers. But I think gold is in the early days of a bull market breaking out to new highs, and just frustrating some people by not continuing.
AKIKO FUJITA: Mike, you know, we often sort of simplify the gold tray by talking about it being a safe haven. What’s different about this rally that we have seen? It certainly feels like it’s got more legs to run?
MIKE MCGLONE: Well, what’s different specifically today is there’s the digital alternative. There’s one thing I was– I’m not surprised gold’s knocking around and driving people crazy, around $2,000 an ounce. It’s been doing that for three years. But it’s the fact that despite the stock market being down, digital gold Bitcoin is up a lot today.
So I think it sticks with my narrative that this is not our father’s gold market. You really can’t hold gold anymore, or have interest in gold without some Bitcoin in that space because it’s a better fit for the world going digital. So I’m bullish gold.
I’m less bullish Bitcoin, if the stock market goes down. But it’s proving divergent strength. So to me, that’s the key thing that’s different, is that there’s that alternative in digital gold.