(Kitco News) - Volatility in the gold market has picked up as prices have been unable to hold their recent gains after testing resistance at $3,500. Despite solid profit-taking, one market strategist says the precious metal’s rally remains on solid footing.
In an interview with Kitco News, George Milling-Stanley, Chief Gold Strategist at State Street Global Advisors, said that economic uncertainty continues to dominate the global marketplace and that fear will continue to support gold’s safe-haven allure, even at higher prices.
“The market does not feel frothy to me when you look at the environment we are currently in,” he said. “There is an unprecedented level of uncertainty, and nobody seems to have any major plans to try to make it any better. A recession or stagflation has just made everything much, much better for gold, quite frankly.”
Milling-Stanley’s optimistic comments on gold come as the world’s largest gold-backed exchange-traded fund hit a new milestone. With renewed investor demand coupled with higher gold prices, SPDR Gold Shares (NYSE: GLD) saw its assets under management rise above $100 billion for the first time since it was launched nearly 21 years ago.
It's not just GLD that has seen significant growth; Milling-Stanley pointed out that SPDR Gold MiniShares (NYSE: GLDM) has also seen solid inflows. Its AUM is up $2.5 billion year to date, for a total of $14.5 billion.
So far this year, global gold-backed ETFs have seen inflows worth $21.1 billion; however, ETF investment demand is still well below levels seen in 2020.
Using 2020 as the benchmark, Milling-Stanley said that it is one strong indication that interest in gold is far from peaking.
“Gold has definitely got legs at this point, and I think there's a very good chance it could continue to go up,” he said.
And it’s not just market uncertainty and fear that is driving investors back into gold. Milling-Stanley also noted that the yellow metal is being viewed as an important safe-haven asset as trust in the U.S. economy starts to erode.
“Confidence in the United States and confidence in the US dollar have taken a big hit, and I don't think that that is going to come back in a hurry. I can't see the steps that the administration could take to make it all come back in a hurry,” he said. “It’s difficult to see the situation for gold to deteriorate from where it is right now.”
In April, State Street’s gold team increased its 2025 gold forecast with the base case seeing prices trade between $2,800 and $3,100 an ounce this year, the bull case called for a range between $3,100 and $3,400 an ounce, up from the previous forecasted ranges of $2,600 to $2,900 and $2,900 to $3,100 respectively.
While Milling-Stanley still sees plenty of upside potential for gold, he added that investors shouldn’t try to chase the market.
“If you're a tactical investor who is buying gold with the belief that the price is going to go up in the very, very near future and you're going to be able to sell it at a profit, I would think that that is a rather dangerous view to have with the price where it is,” he said. “But if you're a long-term strategic investor, then the entry point becomes a lot less relevant. You've missed an enormous number of buy signals, but I think there's no question that gold can still go higher from here.”
