It was another record-breaking week for gold, which surged past US$2,400 per ounce for the first time ever.
Some market watchers are pointing to safe-haven demand as the reason for the surge as tensions rise in the Middle East — concerns that Iran will launch an attack on Israel have been described as "credible" and "viable."
Other experts think there are less obvious factors at play — activity in the options market and Comex net managed money are a couple that have been mentioned. But many are suggesting that we just don't know what's happening yet.
It's worth noting that gold's price surge comes after the latest US consumer price index (CPI) data. The Wednesday (April 10) report shows inflation came in hotter than expected, clocking in at 3.5 percent in March — that's up from 3.2 percent the previous month. Core CPI, which excludes the volatile food and energy segments, stayed flat at 3.8 percent.
The US Federal Reserve has consistently said it wants to see inflation under control before it begins cutting interest rates, and with its 2 percent target not getting any closer, there's speculation that the central bank will keep delaying its turnaround. Gold fares better when rates are lower, and it's interesting to see such strength while they are high.
Is gold's price rise real?
Against that backdrop, I'm noticing a lot of questions about whether gold's price move is "real." This week I asked Gareth Soloway of VerifiedInvesting.com for his perspective — he sees US$2,500 as a "lock" for gold in 2024, and said the yellow metal could even rise as high as US$3,000 in the next 12 to 18 months.
However, Soloway emphasized that he expects the price to go lower before that — he mentioned US$2,075 as a level to watch, and said that at this point pullbacks are buying opportunities for him.
I also heard from private investor Don Hansen, who is a favorite for our audience. He got in touch and was keen to share his research on the relationship between the gold price and US money supply. By looking at historical data from two previous bull markets, Hansen showed how gold still appears to have quite a bit of room to run.
Bullet briefing — Copper price keeps running, Rinehart makes rare earths investment
Citigroup calls copper bull market
Copper has been a hot topic for the last couple of weeks, and the red metal continues to make headlines.
This week it was trading around levels not seen since mid-2022, buoyed by growing awareness of supply-side constraints and expectations for strong future demand. Large investment firms are taking note — analysts at Citigroup (NYSE:C) said copper has entered its second secular bull market this century, while Bank of America (NYSE:BAC) has raised its 2024 price target for the base metal to just over US$9,300 per metric ton.
Hancock takes stake in MP Materials
Finally, let's look briefly at a development in the rare earths sector. Hancock Prospecting, which is run by Australian billionaire Gina Rinehart, was revealed to have acquired a 5.3 percent stake in US rare earths producer MP Materials (NYSE:MP). Hancock is focused mainly on iron ore, but has begun to diversify within the resource sector.
The company declined to comment on its connection to MP Materials, but market watchers have reportedly speculated that it may be buying more shares. MP Materials is the second largest rare earths producer outside of China.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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