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Gold's uptrend still healthy as uncertainty support prices above $1,500 - State Street Global Advisors

Kitco News

(Kitco News) - Gold’s current consolidation around $1,500 an ounce is a healthy move as the market needed to cool down after the summer’s red hot rally, according to one market strategist.

George Milling-Stanley, chief gold strategist at State Street Global Advisors

In a telephone interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said that gold’s resilience around $1,500 demonstrates how much uncertainty is still surging through financial markets.

“I have been very comfortable with this consolidation period,” he said. “A lot of people have started to call for $2,000 gold or higher. That concerns me, because I see that kind of move as too far, too fast.”

He added that he expects gold to continue to rally but at a more sustainable pace. Because of current market conditions, which include overvalued equity markets and trillions of dollars in negative-yielding sovereign debt, it wouldn’t take much to push gold prices back above last month’s six-year highs, he said. December gold futures last traded at $1,514.60 an ounce, up 1.22% on the day.

“The market has priced in a lot of bad news, but it the economic outlook is still a pretty nasty picture from my point of view,” he said. “In this environment, I expect that gold will continue to shine.”

Milling-Stanley added that U.S. monetary policy will continue to support gold prices as it is unclear the Federal Reserve will be able to hold its neutral stance as the threat of a global recession continues to grow.

Milling-Stanley’s comments come the day after the Federal Reserve cut interest rates for the third consecutive time since July. However, the central bank signaled that it is ready to hold rates steady as it continues to monitor the health of the economy.

However, the biggest threat to the economy remains unresolved, said Milling-Stanley. Although trade tensions between the U.S. and China have eased since the summer, Milling-Stanley said the still has the potential to push the U.S. into a recession.

But the gold price is more than just U.S. monetary policy. Milling-Stanley said that the gold market is in a good place, building a solid foundation around $1,500 as geopolitical uncertainty gets ready to heat up ahead of the 2020 U.S. Presidential elections.

“The U.S. presidential elections will be very messy and that will be helpful for gold,” he said.

Milling-Stanley added that he is also optimistic that renewed growth in emerging market countries will boost jewelry demand and global gold prices.

As to what investors could expect for the rest of the year, Milling-Stanley said gold’s uptrend remains in place as prices hold above $1,450 an ounce.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.