Expert: Buy Gold Now Before It’s Too Late, Says WisdomTree Head of Commodity Research

Investing.com – Shifting interest rate expectations are likely to lead to renewed volatility in the gold market as prices struggle to return towards the 2,000 level for an ounce; However, according to a market strategist, this volatility creates an attractive buying opportunity for investors looking for gains in the precious metals market.

Nitish Shah, head of commodity research at asset management firm WisdomTree, reiterated his stance that anything below $2,000 remains an attractive entry point for investors, which he expects to rise much higher a year from now.

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He added that he expects gold prices to rise to $2,285 an ounce by the first quarter of 2024, which would mark a new all-time high for the precious metal.

“Gold prices are higher compared to last year, but it still looks cheap compared to where we see it going,” he said.

Last month, gold saw a strong decline from $2,000 an ounce as relatively strong economic data continued to support the Fed’s aggressive monetary policy stance, capping gold’s gains.

However, in recent weeks, gold has held a crucial support around $1950 an ounce with the outlook changing again. As many analysts and economists note, it is slowly approaching the end of the monetary tightening cycle. Markets expect the Fed to be left unchanged when it meets next week.

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No fear of gold

Shah said that although interest rates could continue to rise, gold investors have little fear because each new rate hike pushes the global economy closer to recession, which supports gold’s rally. He added that while the economy has been reasonably resilient, the risk of a recession has not completely gone away.

Shah said central banks have not succeeded in designing a “soft landing” for the economy and are unlikely to do so in this tightening cycle.

Shah also pointed out that central bankers and politicians focus a lot on the labor market, which is not as true as it seems. He said the job market remains strong due to strong economic growth.

“In order to be able to reduce inflation to the target levels, central banks may have to trigger a recession to counter the impact of structural change in the labor market that leads to higher prices for services,” he said.

He continued, “It would be painful for a whole group of people. With that in mind, it is best to have gold in your portfolio to hedge these risks.”

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Stagnation and gold

As for what will bring investors back into the gold market, Shah said it will likely take a full recession with stock markets lower. He added that because the recession has taken so long and has not yet materialized, investors will not be convinced it is happening until they are in the midst of it.

However, Shah said investors should not wait for a recession.

“Now is the time to prepare your portfolio. The time to buy gold is not when risk occurs but before risk occurs.”