Gold prices ended the year on a high note, gaining 66%. This was their best performance in a single year since 1979. They also held steadfast above $4300 per ounce.
Chantelle Shieven, head of research at Capitalight Research, says that the rally could continue well into next year. This would be a sign of a “tectonic change in the global financial markets.”
Schieven, in an interview Kitco News with Schieven, explained that while the Earth’s plates move very slowly, an explosive moment can occur.
Gold’s explosive move
She said that the explosive change that could occur in 2025 will likely alter the landscape of financial markets.
Schieven warned investors to not mistake the current valuation as an end to its uptrend, despite growing concerns that this year’s rally in gold has led to the market entering significantly overbought terrain.
She said:
Gold is not going to fall next year or any time soon, even if it’s in bubble territory.
Schieven predicts that central banks will continue to be a major force on the gold market through 2026. They are expected to add value to investors.
The consistent official demand provides a floor price that wasn’t present in previous market cycles.
She predicted that, given the current conditions on the market, prices would “easily” rise to $5,000 an ounce within the next year.
Schieven predicts that, although central bank purchases of gold will remain a major support to the market up until 2026, investment demand is likely to drive prices.
Schieven says that despite gold’s appearance of being at its highest point, it isn’t excessively speculative (or “frothy”).
Gold is underrepresented, she said, in portfolios of investors, particularly when macro-risks are taken into account.
Inflation and the Federal Reserve: Lingering uncertainties
Federal Reserve’s last meeting on monetary policy ended with an overall positive view of the economy, and projections that inflation will gradually return to target.
Schieven, despite this optimism expressed doubts that the Fed’s expectations of a rapid dissipation of inflationary pressures.
She argues that fundamental structural factors–specifically deglobalisation, increased trade fragmentation, and sustained underinvestment in commodities–are inherently inflationary forces that will persist.
Schieven says that higher inflation makes bonds’ traditional role as a safe haven more complicated.
Investors who are experiencing negative returns on their portfolios see gold as more than just a hedge. It is a critical component of diversification.
Fed predicts – on the hope that it will happen – a decline in inflation.
Schieven stated that bonds are not perceived to be a safe investment anymore, especially if the inflation rate proves higher than what central banks expect.
She added that for investors who think inflation will continue to be high, buying bonds now may not make sense.
Schieven also discussed subtle but significant changes to Fed policy such as the balance sheet adjustments that aim at capping bonds yields.
These steps may offer a short-term solution but they don’t do much to restore faith in the long-term stability of the currency, which is a key factor for gold.
Schieven is optimistic and believes that $5,000 would be a realistic goal to achieve in the coming year. This target is seen as a short-term goal within an extended, upward trend.
Schieven predicts that the relative volatility of the market will increase, leading to healthy and constructive corrections.
This article Gold’s “tectonic change”: Analyst projects $5,000 price goal amid persistent inflation first appeared on The ICD
This site is for entertainment only. Click here to read more
