Gold Can Still Reach New Highs, Says Strategist

Gold prices are up 5% for the year, but they have been slowly retreating after peaking in May. Still, one strategist foresees further strength in gold prices, potentially translating into new highs.

In a recent Kitco News report, Nicky Shiels, metals strategist at MKS PAMP, is standing firm on her 2023 year-end price outlook of $1,930 per ounce. Per the report, “MKS sees gold prices trading in a range between $1,850 and $2,100 an ounce through the second half of the year.”

The threat of a recession still looms large over the U.S. economy, especially after recent employment numbers revealed that hiring cooled during the month of June. The U.S. Federal Reserve may need to keep rates higher longer than anticipated as inflation proves to be more stubborn than originally forecasted.

Given these push-pull factors for gold prices, Shiels recommended staying nimble. This is especially the case since gold could see more downward pressure this summer, but on the bullish side, it could still reach record highs by year’s end.

“Stay core long Gold but remain tactically nimble, which hinges on the interplay between a relatively restrictive Fed & stronger US data,” Shiels said in her latest report, according to Kitco News.

“We do expect a bumpy 2H’23 as monetary policy starts to bite; Gold prices are then expected to print a new all-time-high in 2H’23 and pierce $2100/oz,” Shiels added. “Our conviction lies in higher floors versus runaway upside repricing unless the Fed loses the inflation fight (not our base case) or breaks something more substantial in the economy.”

2 Options for Gold Exposure

Investors who want to get gold exposure to complement their portfolios can do so with a pair of Sprott funds. For broad-based gold exposure with the option to exchange shares for physical gold, consider the Sprott Physical Gold Trust (PHYS).

Additionally, for an alternate play on gold prices via ancillary gold services like mining, investors can also consider the Sprott Gold Miners ETF (SGDM). If demand continues to rise for gold, this can have a domino effect on the performance of miners, thus allowing for indirect exposure to upside in gold prices.

Per SGDM’s fund description, the ETF seeks investment results that correspond generally to the performance of its underlying index, the Solactive Gold Miners Custom Factors Index. The index aims to track the performance of larger-sized gold companies. In particular, it tracks those whose stocks are listed on Canadian and major U.S. exchanges.

For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.