{"id":492707,"date":"2025-10-12T04:35:26","date_gmt":"2025-10-12T04:35:26","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/492707\/"},"modified":"2025-10-12T04:35:26","modified_gmt":"2025-10-12T04:35:26","slug":"the-bullish-case-for-gold-paid-off-now-what","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/492707\/","title":{"rendered":"The bullish case for gold paid off. Now what?"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Gold has rewarded those looking for safety, but its stellar gains may be attracting another sort of investor.Angelika Warmuth\/Reuters<\/p>\n

When the price of gold rallied above US$4,000 an ounce this week for the first time, it followed a path<\/a> established by bullish forecasters earlier in the year. But are we facing yet another pricey asset? <\/p>\n

Gold has maintained a blistering pace throughout much of this year. It broke through US$3,000 an ounce in March and has gained about US$700<\/a> since August alone. <\/p>\n

This year\u2019s rally, at 53 per cent since the start of January, may turn out to be the best year for gold in well over four decades.<\/p>\n

Many Canadian producers are performing even better, as the surging underlying commodity translates into fatter profit margins.<\/p>\n

U.S. dollar anxiety drives precious metals rally as gold trade gets crowded<\/a><\/p>\n

Agnico Eagle Mines Ltd. AEM-T<\/a> and Barrick Gold Corp. ABX-T<\/a>, among the biggest companies in the sector, have doubled, driving the S&P\/TSX Composite Index to new heights.<\/p>\n

There are several reasons for gold\u2019s popularity among investors.<\/p>\n

The economic uncertainty flowing from U.S. President Donald Trump\u2019s erratic tariff policies<\/a> has turned many safety-seeking investors toward the metal\u2019s haven status. <\/p>\n

The U.S. dollar index, which compares the dollar against a basket of global currencies, has retreated about 10 per cent since January, adding a significant tailwind given that gold is priced in U.S. dollars.<\/p>\n

The start of a new round of rate cutting by the Federal Reserve last month has reduced the opportunity cost of holding gold. Since the commodity doesn\u2019t pay a dividend, it becomes more attractive as rates fall and yields on dividend stocks and bonds decline.<\/p>\n

Add simmering concerns about inflation<\/a>, Mr. Trump\u2019s efforts to throttle the Fed\u2019s independence and spiralling government debt in the United States and abroad \u2013 conditions that can drive investors into alternative assets \u2013 and it is not a huge surprise that gold has been breaking records this year.<\/p>\n

The case for US$5,000 rests on central banks buying more bullion to diversify their reserves. A terrifying correction in stocks might not hurt either.<\/p>\n

But jumping into gold today also comes with risk: While the world looks upside down right now, it might not stay that way.<\/p>\n

Gold is notoriously difficult to value, since its industrial uses are limited, leaving some observers reluctant to say how long the current rally can go.<\/p>\n

\u201cGold is like the art market \u2013 prices have completely disconnected from marginal production costs, and we are at lofty price levels on most valuation metrics,\u201d Max Layton, a commodities analyst at Citigroup, said in a note late last month. <\/p>\n

These lofty levels may be due to surging interest among investors who have tapped gold as the next big thing in a market that has plenty of bubbly-looking assets \u2013 from AI to Bitcoin to silver to the S&P 500.<\/p>\n

Hamad Hussain, climate and commodities economist at Capital Economics, thinks that the record amount of money flowing into bullion-backed exchange-traded funds suggests that investors, rather than central banks, are now driving the gold market.<\/p>\n

This buying impulse could be driven less by an urgent need for a safe haven and more by that nemesis of fundamental valuation \u2013 fear of missing out.<\/p>\n

\u201cGiven that \u2018FOMO\u2019 appears to be creeping into the gold market, it has become even harder to objectively value gold,\u201d Mr. Hussain said in a note this week.<\/p>\n

While gold prices could grind higher in the next couple of years, he added, the rally will slow as those bullish tailwinds start to weaken.<\/p>\n

You could see a hint of this slowdown on Thursday with the arrival of \u2013 what\u2019s this? \u2013 good news.<\/p>\n

After Israel and Hamas signed an agreement<\/a> to end two years of war, potentially removing a grave geopolitical crisis, gold fell 2.4 per cent and retreated below the US$4,000 an ounce threshold, before rebounding early Friday.<\/p>\n

Late arrivals to the gold trade might want to contemplate the arrival of more good news.<\/p>\n

Renewed confidence in an independent Fed, subsiding U.S. inflation or newfound strength in the global economy as it adjusts to tariffs might not exactly play into the long-term bullish case for bullion.<\/p>\n

Mr. Layton, who likes gold, nonetheless expects that there could be a rotation out of the commodity next year, and into more useful metals like copper and aluminum, as the economic backdrop improves.<\/p>\n

Gold has rewarded investors who bet that anxiety would drive demand for a traditionally safe asset. The world remains unsettled \u2013 and a future Nobel Peace Prize for President Trump doesn\u2019t look like such a long shot now \u2013 which could work in gold\u2019s favour. <\/p>\n

But investors can\u2019t ignore the downside: Gold is looking old.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Gold has rewarded those looking for safety, but its stellar gains may be…\n","protected":false},"author":2,"featured_media":492708,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3091],"tags":[6934,6925,6935,1500,6918,6936,51,943,6917,6930,6931,6927,6919,6916,1700,2266,728,6929,6923,6946,6920,6921,1234,6926,388,3611,6607,2441,603,6941,6942,6944,6939,6943,6937,6940,6922,6932,6933,285,3027,6938,6924,53,183,6928,16,15,727,263,6945],"class_list":{"0":"post-492707","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-alberta","9":"tag-arts-news","10":"tag-bc","11":"tag-breaking-news","12":"tag-breaking-news-video","13":"tag-british-columbia","14":"tag-business","15":"tag-canada","16":"tag-canada-news","17":"tag-canada-sports","18":"tag-canada-sports-news","19":"tag-canada-trafficcanada-weather","20":"tag-canadian-breaking-news","21":"tag-canadian-news","22":"tag-economy","23":"tag-education","24":"tag-environment","25":"tag-federal-government","26":"tag-foreign-news","27":"tag-globe-and-mail","28":"tag-globe-and-mail-breaking-news","29":"tag-globe-and-mail-canada-news","30":"tag-government","31":"tag-life-news","32":"tag-lifestyle","33":"tag-local-news","34":"tag-manitoba","35":"tag-markets","36":"tag-national-news","37":"tag-new-brunswick","38":"tag-newfoundland-and-labrador","39":"tag-northwest-territories","40":"tag-nova-scotia","41":"tag-nunavut","42":"tag-ontario","43":"tag-pei","44":"tag-photos","45":"tag-political-news","46":"tag-political-opinion","47":"tag-politics","48":"tag-politics-news","49":"tag-quebec","50":"tag-sports-news","51":"tag-technology","52":"tag-travel","53":"tag-trudeau","54":"tag-uk","55":"tag-united-kingdom","56":"tag-us-news","57":"tag-world-news","58":"tag-yukon"},"share_on_mastodon":{"url":"","error":"Validation failed: Text character limit of 500 exceeded"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/492707","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=492707"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/492707\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/492708"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=492707"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=492707"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=492707"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}