(Kitco News) - Gold could surge past $3,000 in the next month, according to Chris Vermeulen, founder and chief investment officer at The Technical Traders.
“Right now, gold is still in a bullish phase,” Vermeulen told Kitco News. “It's still trading higher. It looks like it's on the verge of breaking out and running to $3,050.”
This comes as the Federal Reserve has decided to maintain interest rates within a range of 4.25% to 4.5%, signaling a cautious approach amid a complex economic landscape. The decision, made by the Federal Open Market Committee, reflects a desire to see further progress on inflation and to assess the potential impacts of President Donald Trump's policies on the economy.
Powell's cautious stance
Federal Reserve Chair Jerome Powell emphasized that the central bank is not in a hurry to lower interest rates. He noted the economy's current strength and that interest rates are no longer as restrictive as they previously were. "We do not need to be in a hurry to adjust our policy stance," Powell stated. The Fed is pausing to evaluate further progress on inflation and to assess the potential economic effects of President Trump's policies on trade, immigration, and taxes.
The Fed removed a reference to inflation making progress towards their 2% goal, clarifying that this was not meant to send a policy signal. Powell stressed the need for "serial readings" suggesting further progress on inflation before any rate adjustments are made.
Trump's influence on the Fed
The Fed is "playing it safe," Vermeulen noted, adding that they will "ride it out until they need to make a change".
President Trump, a frequent critic of the central bank, has publicly pressured the Fed for immediate rate cuts. Trump has also indicated that he intends to address inflation through changes in energy, regulation, international trade, and manufacturing. When asked about Trump's remarks, Powell declined to comment.
Vermeulen pointed out that Trump is "the wildcard" regarding what will happen next. “A lot is a question of what he's going to do and how severe and how quickly is he going to implement things,” he said. “The Fed meeting was super vanilla and Trump is the now more so the wildcard of what's going to happen tomorrow?”
The Fed's next meeting in March will include updated economic projections. The central bank will continue to monitor incoming data, the overall economic outlook, and potential policy changes.
AI sector and market volatility
The tech sector has experienced a downturn, with NVIDIA shares falling after reports of potential restrictions on H20 chip exports to China. This comes as a Chinese AI firm, DeepSeek, has demonstrated the ability to build more AI models at a fraction of the cost. Vermeulen commented that this news has "spooked" investors in the AI sector.
”As companies get bigger, you're going to always have extreme new highs and extreme new lows. In terms of NVIDIA losing $600 billion on that one day in market share value, which is the biggest yet that we've ever seen for a one-day sell-off,” Vermeulen said.
However, while the tech sector experienced a sell-off, other sectors, such as consumer staples and financials, were positive, indicating that "it wasn't a broad market sell-off."
Vermeulen’s longer-term view is that the stock market “is on the verge of topping out. “He added, “It's going to happen in the next couple of months and during that time … gold can actually still push higher.”
Gold's bullish trend and safe haven status
Gold prices have hit a new record high Thursday morning, with spot gold trading at $2,790 at the time of writing.
Vermeulen believes, "gold is still in a very strong uptrend," and may reach $3,050 in the next month or so. He added, "It's just going to be continued uncertainty of what's going on with the economy" that is driving people to safe-haven assets like gold, noting that investors tend to move to physical gold when they get nervous about the financial system.
Vermeulen also cautioned that "gold is going to have a big correction in due time," possibly this year.