Gold Investors Swiftly Buy Dip to $2,500 Area

Precious metals prices soared higher in 2024, with gold and silver both showing 25%+ gains since January. After gold hit a new record high above $2,780 in late October, the precious metal slid lower, pressured by a rising U.S. dollar, profit-taking by short-term traders and on the news that U.S. presidential election would not be contested.

If you haven’t been watching the price of gold closely, you probably missed this latest dip in the price. This was a “don’t blink” or you might miss it type of rally in gold. During a few short days in mid-November, gold investors aggressively bought gold at the bargain price of under $2,600 an ounce.

Here’s a quick recap:

• By November 13, gold had slid as low as $2,558 an ounce.
• As gold approached support at the $2,500 an ounce area, bargain hunting gold investors quickly swooped in and began buying the yellow metal and the price began steadily climbing.
• On November 18, gold hit $2,624.
• And, by November 22, gold touched $2,717.

What does this mean for gold? The precious metal is in a strong, long-term uptrend.

The November pullback in gold was short-lived and investors used the price dip as an opportunity to accumulate precious metal at a bargain price. Some investors may be wondering if the rally in gold is coming to an end—after all, it has outpaced gains in the S&P 500 index this year.

The answer from Wall Street is a resounding no, this rally is not over! Indeed, forecasters from many banks are raising their forecasts for gold in the months ahead. So, yes indeed, this rally in gold can continue—with the next major price target at the $3,000 an ounce level. Even if you missed the recent price dip, there is still plenty of upside potential from current levels.

Here are just a few reasons that Wall Street firms project new record highs in gold to $3,000 an ounce and beyond ahead:

• The U.S. government and other advanced nations around the globe are running massive debts. Since 2016, the U.S. federal debt level has grown from 105% of GDP to 123% of GDP. And, the fiscal deficit has doubled from 3.1% in 2016 to over 6% this year. These rising and unsustainable debt levels are likely to result in higher inflation and devaluation of paper currency—which supports further upside in gold.
• Geopolitical tensions boost gold’s safe-haven appeal. From Israel’s war against Hamas to the Russian war against Ukraine, the humanitarian devastation has been high and the global military balance is fragile and unsettled. As these tensions continue to percolate, investors will continue turning to the safety of precious metals. These geopolitical tensions also raises questions about the impact to the American economy and the stability of our financial markets.
• Central banks continue to aggressively buy gold. This past July, central bank buying of gold hit a 14-year high. Major central banks like Russia, China, India, Poland, and Hungary are substantially increasing their gold reserves.

So, it’s worth repeating. Even if you missed the recent price dip, there is still plenty of upside potential from current levels in gold. As we head into year-end, take a look at your portfolio allocations and consider: is it time to buy more insurance for your wealth?

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