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Investing.com – It is nearing new highs above the $2,000 an ounce, as it has held above $2,000 since Tuesday. In this context, Bob Iaccino, co-founder of Path Trading Partners and chief market strategist, talked about the reason for the price hike and whether or not it can rise to new historical levels in the coming period.
The expert explains that inflation is one of the reasons for the rise in gold, saying, “We forget that the good part of inflation is asset inflation, and gold is an asset.”
When asked if gold could reach new highs, he said, “If things go the way I think they will, we could easily see gold above $2,800 within the next 12 months.”
Bob added: “What will happen in the coming period is that the Federal Reserve will cut interest rates to help the economy, which supports gold prices. Markets expect the US Federal Reserve to start reducing interest rates starting in July of this year, however the Fed says He won’t do that.”
Another thing that supports gold is that people see it as an inflation hedge. Thus, with the rate cut this year, inflation may remain at high levels, which may support prices. What has contributed to gold’s poor performance over the past decade is that we haven’t seen inflation. This is what led to the weak performance of gold. When inflation started to climb, gold rose.
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Bob said: I think we can easily reach new highs. And I think if things go the way I think they will, over the next 12 months, we could easily see gold above the 2800 level. I used to say by the end of the year. I don’t say that anymore because I think the Fed has been more aggressive than I thought it would be. But I think the issue now is that the Fed should stop trying to fight inflation.
And I don’t think people realize how bad it is for the whole country, for just 2 or 3 million people. And I don’t mean to belittle that. I will confirm that. But 2 or 3 million people could lose their jobs in a recession. As a recession is not necessarily good for gold, but it excels when there is inflation and recession. And I think that’s what we’re going to do because I think the Fed will give in to the pressure and stop fighting inflation.
