Gold could ride as high as $2,400 this year: Strategist

Gold prices (GC=F) have seen a steady climb higher year-to-date as more investors are picking up the commodity trade. State Street Global Advisors Chief Gold Strategist George Milling-Stanley joins Yahoo Finance to talk gold’s swing up in 2024 in a “combustible” environment compounded by geopolitical tensions and the Federal Reserve’s higher for longer interest rate forecast.

“If you look at the history of gold, then this is exactly the kind of environment in which gold has tended to perform very, very well,” Milling-Stanley says, also discussing the investor audience gold is appealing to at the moment.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor’s note: This article was written by Luke Carberry Mogan.

Video Transcript

SEANA SMITH: We want to bring in George Milling-Stanley here at the desk with us, State Street Global Advisor’s Chief Gold Strategist. It’s great to talk to you again. So we spoke just about a month ago when you were outlining the fact that as we see this run up in the price of gold, expectations are continually changing here, just in terms of what the Fed is going to do, the impact that that is ultimately going to have on the price of gold. So I’m going to ask you a similar question to what I asked you just about a month ago, but do you think we’re still going to trend to the upside here from these levels?

GEORGE MILLING-STANLEY: It looks like that way. If you look at the history of gold, then this is exactly the kind of environment in which gold has tended to perform very, very well. You’ve got macroeconomic issues, the stock market occasionally wobbling, we’re not quite sure when Jerome Powell is going to start cutting rates but he is confident he’s going to cut this year. And you’ve got a geopolitical environment that’s also pretty combustible. And all of that put together, I think it’s exactly the kind of environment in which I would expect gold to do exactly what it’s doing right now.

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SEANA SMITH: How much higher do you think it could go?

GEORGE MILLING-STANLEY: A good deal, I think. Our bullish case, the team that I’m part of at State Street, we put out our forecasts in December, our bullish case suggested gold could trade anywhere between 2,200 and 2,400. We’re right slap in the middle of that right now and it’s still pretty early in the year. So we’re pretty confident.

MADISON MILLS: Who are you seeing as the kind of audience for gold right now? What does that look like? And does it differ from what we’ve traditionally seen?

GEORGE MILLING-STANLEY: Look, I think you’ve got a mix always in gold. You’ve got the long-term strategic asset allocation type purchases that has been continuing pretty steady all year. And then from time to time, gold develops some momentum as it has done. You showed that brilliantly on that chart gold developed some momentum so you bring in the speculative interests as well. That combination, long-term strategic asset allocation plus tactical buying is going to push the price higher.

SEANA SMITH: When you talk about the action that you’ve seen in gold, it doesn’t sound like it necessarily surprised you given the forecast that you came out with at the start of the year. But when you talk about the uncertainty surrounding the Fed, comparing that to the run-ups that we’ve seen in gold prices in the past, how does what we’re seeing today compared to past bullish sentiments here for gold?

GEORGE MILLING-STANLEY: I think the real issue is what’s going to happen to the dollar. If interest rates are going to come down and that’s what Jerome Powell keeps telling us, then the dollar is going to soften. And when the dollar softens, gold tends to do better. So that’s really the way that I’m looking at things right now. Watching the Fed to see what they’re going to do and when they’re going to do it, that’s almost as important, is what they’re going to do.

MADISON MILLS: Well, what do you think?

GEORGE MILLING-STANLEY: I think they’re going to cut rates probably by 3 cuts this year. Whether they start in June or not, I’m not so confident of that. It may well not be until the second half of the year, but I still think that they’re on track for that. Inflation is still with us. It’s come down on the Fed’s preferred benchmark core, personal consumption expenditure has come down from 5.4, but it’s still at 2.5 and their target is still 2. That last mile, if I can put it that way, is always the hardest one to do.

SEANA SMITH: George, were you seeing that opportunity here for investors? Is it buying physical gold? Is there other opportunities out there? In terms of what would do best in this type of environment, what are you seeing there?

GEORGE MILLING-STANLEY: I’m a great believer in liquidity. And I think that gold ETFs have shown a tremendous amount of liquidity since we launched the first one 20 years ago this November. We’ll be celebrating that in November. So I think that gold ETFs are probably the best way for people to go. But there’s no one way for all investors.

MADISON MILLS: And one final question on that. What is the best way for investors to be utilizing gold as an investment? Should it be viewed as an inflation hedge, hedge against the Fed, what’s the most effective?

GEORGE MILLING-STANLEY: All of the above. What I like to say is that the promise of gold historically for investors is that a dual nature that over time it can enhance performance and it can always reduce risk. And if anything is giving me protection plus performance, that’s an asset I want in my portfolio.

MADISON MILLS: Really helpful. Thank you so much. Really appreciate you joining us. That was George Milling-Stanley, State Street Global Advisors Chief Gold Strategist joining us on all things gold and the Fed, of course, as well.