Gold had a disappointing start to the year after showing significant momentum in December. Despite this, the market analyst, George Milling-Stanley, believes that gold is still in a good position. Although gold prices saw a slight decline last month, historically January has been one of the best months for gold. It has seen an average monthly gain of more than 3% over the last ten years. However, last month, the market saw a decline of 0.2%. Prices have continued to consolidate in a range, unable to hold consistent gains above $2,050 an ounce.
Milling-Stanley emphasized that even though gold faces some significant headwinds, it remains well-positioned as it holds critical support above $2,000 an ounce. This is particularly important as the Federal Reserve pushes back on expectations of aggressive easing this year. While the central bank continues to lay the groundwork for eventual rate cuts, the cycle is not expected to start in March, and the number of cuts could be fewer than the six markets have priced in.
Additionally, Milling-Stanley noted that central bank demand and solid physical demand in over-the-counter (OTC) markets could keep gold prices well above $1,900 an ounce. Despite the struggles gold has faced and the fact that many investors are sitting on the sidelines, waiting for a pullback before entering the market, Milling-Stanley believes that because of central bank and OTC demand, pullbacks have been shallower than expected.
Furthermore, he believes that instead of focusing on gold’s struggles, investors should focus on its momentum and upside potential. There are several sound reasons why gold should be going down, yet it is holding steady at a high level. This, according to Milling-Stanley, counts as momentum and he expects to see even more of it. In conclusion, he is optimistic about gold’s strength, predicting that it will get even stronger in the future.
Our additional insight: While gold prices may be struggling to gain momentum, it has managed to hold critical support levels and has shown resilience in the face of macroeconomic challenges. This suggests a strong underlying demand for the precious metal, which can provide a level of stability and diversification in investment portfolios. As Milling-Stanley pointed out, the current environment presents a compelling case for gold’s continued strength, and investors should consider the potential benefits of including gold in their investment strategy.
