① The Federal Reserve has shifted notably hawkish, international gold prices continue to hover at low levels, and major Wall Street banks have successively lowered their gold price targets.
② Jerry Prior, CEO of Mount Lucas Management hedge fund, believes that despite short-term headwinds, the recent gold correction offers investors an attractive entry point.
June 24 — As the Federal Reserve clearly turns hawkish, international gold prices continue to linger at low levels, and major Wall Street banks have successively cut their gold price targets. At the same time, some analysts argue that although short-term unfavorable factors continue to weigh on prices, the recent gold correction has created an attractive entry point for investors.
Looking toward the end of the year, Prior stated that with the re-emergence of central bank demand and structural de-dollarization trends continuing to support investment inflows into precious metals, he expects gold prices to climb to approximately $4,500 per ounce.
“I believe the structural de-dollarization trend, combined with increased oil production in the Middle East, will attract buyers back,” he added. “I think gold prices will rise from here.” Ignoring the “Noise” Although Prior remains bullish on gold, he acknowledged that investors may face greater volatility in the short term. Persistently rising interest rates and stable inflation expectations could temporarily weigh on gold. He also noted that gold does not always perform well during periods of high inflation, especially when rising interest rates increase the opportunity cost of holding a non-yielding asset. However, he said investors should focus on the larger structural themes rather than short-term interest rate fluctuations. “Gold is a defensive asset in a portfolio,” he said. “The retail money that previously flowed into the gold market has largely been cleaned out, so you should not be caught in panic selling now.” Prior further pointed out that the macroeconomic environment overall continues to support a strategic allocation to gold. He expects inflation to remain structurally higher than pre-pandemic levels as manufacturing reshoring and supply chain restructuring reverse the decades-long deflationary trend driven by globalization. He concluded by emphasizing that this situation is changing, and inflation is unlikely to return to the sustained low levels of the past two decades. Against this backdrop, he said gold’s recent pullback is less the beginning of a long-term bear market and more a reset within a larger long-term uptrend.
