Gold continues to shine. The yellow metal recently surged above the $2,500 mark, and industry leaders have expressed strong confidence in its enduring bull market.
In an exclusive interview with Investing.com, Alamos Gold (NYSE:AGI) CEO John McCluskey affirmed that the precious metal is still in "a very strong bull phase," underscoring the strategic opportunities that lie ahead for investors.
Why gold prices are hitting record levels
The gold price surge to record levels in recent weeks has been driven by a confluence of economic factors and investor sentiment. One of the primary drivers behind this upward momentum is the growing anticipation of Federal Reserve rate cuts. Last week Fed Chair Powell said at the Jackson Hole Symposium that “the time has come for policy to adjust.”
The anticipation of rate cuts has fueled demand, pushing gold prices higher.
Additionally, the weakening of the U.S. dollar, often correlated with expectations of lower interest rates, has further supported gold's ascent, while fears of a global economic slowdown have also contributed to gold’s appeal.
In a recent note, UBS analysts stated: “Dovish Fed expectations – with UBS economists now forecasting three 25bp rate cuts this year – the move lower in real rates, and a weaker US dollar have all been positive for the gold price.”
They also added that they don’t believe gold is currently overvalued and cite macroeconomic factors, investor positioning, and market dynamics as factors that show there is potential for further price increases.
Meanwhile, Citi analysts said in July that gold prices might surge to $3,000 per ounce as financial flows show potential for significant expansion. The bank said at the time that a dovish pivot by the Federal Reserve "should be bullish for gold and silver into year-end," with positive effects also expected for base metals like copper.
What experts are saying about gold prices
That bullish sentiment is shared by Alamos Gold CEO John McCluskey. He told Investing.com that when assessing the multi-year outlook for gold prices, he is “quite bullish when it comes to some of the price targets being set.”
“I’ve been on record myself predicting a target of $2,650 by the end of the year,” stated McCluskey, who has been in the gold mining industry for over 35 years.
“For most of it we’ve been in a bear market,” he added. “It’s clear, however, that we’re in a very strong bull phase and there are a number of factors driving record prices outside of central bank buying in Asia and de-dollarization.”
McCluskey cited political upheaval and unrest internationally, as well as the issue of U.S. debt and the strength of the economy, as long-term factors that should continue driving the price of gold to new heights.
“The U.S. debt has grown exponentially in recent months, reaching its current level of over $35T,” he adds. “Combined with anticipated rate cuts coming from the Fed and the upcoming U.S. election, as well as the growing concerns around the U.S. economy — these are all factors that can further increase the potential for gold.”