Make Kitco Your Homepage

Gold bull market to push for record highs - fund manager Eric Strand

Kitco News

Editor note Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!

(Kitco News) - $2,000 an ounce is proving to be solid resistance for gold; however, according to one fund manager, it's only a matter of time before the precious metal pushes back to record highs.

In an exclusive comment to Kitco News, Eric Strand, manager of the AuAg ESG Gold Mining UCITS ETC (ESGO), said that he only sees tailwinds for the gold market as the global banking crisis and the threat of a recession forces the Federal Reserve from raising interest rates any higher.

"Even if the gold market has to wait for a little, it will soon charge for a new All-Time-High. Interest rates have already shown signs of 'higher for too long,' and causalities within the banking sector, PE, VC and real estate are now more than obvious," Strand said.

The comments come as gold prices hold solid support above $1,950 an ounce. April gold futures last traded at $1,968.50 an ounce, up 0.75% on the day. Gold prices have maintained their bullish uptrend as markets look for the Federal Reserve to cut interest rates as early as June. The market is pricing in the potential for four rate cuts by year-end, which is at odds with comments from central bank head Jerome Powell who said he expects to hold rates unchanged through the rest of 2023.

Strand also noted that the narrowing gap in monetary policy between the Federal Reserve and the European Central Bank should also be positive for gold. Although the Fed is expected to end its tightening cycle, the ECB has only just started. Strand pointed out that ECB rate hikes should support the euro and weaken the U.S. dollar.

With gold prices expected to push to record highs, Strand said this could be an excellent opportunity for the mining sector, which has lagged behind the precious metal since the start of the year.

ESGO is a specialized European-listed mining exchange-traded product, focusing on mining companies with low ESG risk characteristics. The ETF tracks the top 25 best-in-class ESG Risk companies in the mining sector.

The Fund is managed and supported by HANetf, which is seeing strong growth in another precious metal ETP.

Is the gold price sustainable at $2,000 as the short-squeeze runs its course?

HANeft also manages The Royal Mint Responsibly Sourced Physical Gold ETC (RMAU), a physically backed gold ETP that includes 100% recycled gold bars, reducing the carbon impact of owning gold.

The ETP also allows investors to redeem their investments in physical gold. NANetf announced that it was able to test its redemption process last month, delivering a one-ounce to Wahed, an online Halal investing platform headquartered in New York City, with a Central London branch.

Tom Bailey, head of ETF Research at HANetf, said that in the current environment, having access to physical gold is an attractive alternative asset and allows investors to protect their wealth outside the financial system.

Last year, RMAU saw its asset under management grow 185%, bucking the global trend of consistent outflows as the Federal Reserve aggressively raised interest rates.

At the start of the year, the ETF saw inflows of $9.41 million.

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.