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'Rocks beat stocks' gold is still on its way to $1,900 - Bloomberg Intelligence

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The gold market has seen consistent selling pressure since hitting a 7.5 year high last week, but one analyst said that investors need to keep their eye on the bigger-long term picture.

Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said that gold is just starting its bull rally and investors shouldn't get caught up in the short-term price action, "missing the forest for the trees."

McGlone described the latest price action in gold as "noise within the trend."

"The next really big step for gold is getting above $1,900; it's just a question of time," he said, "I don't see what it is going to take not to go higher and I can think of a dozen reasons for it to go higher."

With the Federal Reserve expected to maintain its extremely loose monetary policy and the global economy nowhere near the road to recovery after being disseminated by the COVID-19 pandemic, gold will remain in a long-term uptrend.

As to what will be the catalyst to drive gold prices to its next stage in its bull run, McGlone said he is looking at over-valued equity markets. McGlone's comments come as the S&P 500 pushed to its highest level since early March, closing Wednesday's session at 3036 points.

"The equity market, I view as delusional at these levels," he said. "I don't think equity prices are sustainable at these levels and that is the biggest debate on the planet, I think right now. The rock is beating stocks."

With more than 30 million people applying for employment in the U.S. even as lockdown measures around the country start to ease, McGlone said that a recovery won't mean business as usual.

"I don't think we're going to come back to the old days of spend what you can right away. We're going back to saving and preparing for the worst, which means more demand for things like gold and bonds," he said. "And there's no more yield in bonds."

As to the timing of his call for gold prices at $1,900, McGlone said that if equity markets see another sharp correction in the fall, then gold prices could be at his target by the end of the year or early 2021.

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