Gold (GC=F) has seen quite the run in 2024 and is set for its best week since early April. The commodity is often viewed as a hedge bet against inflation, but could all that change if the Federal Reserve decides to cut interest rates?

Path Trading Partners Co-Founder and Chief Market Strategist Bob Iaccino joins Catalysts to discuss the momentum behind gold futures and what it means for both the Fed and gold traders

Iaccino speculates on gold's future movements: "If inflation is picking up again, which I believe it is, gold will rally as a function of asset inflation."

He continues: "When you look at asset inflation that comes with it, those of us that own assets like gold, we benefit from that. So my target for gold is about 4.8% higher from here. Very specific: $2,491 [per ounce]. If you get to $24,91, the speculator will probably push it to $2,500 just because they like those numbers."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino

Video Transcript

Gold futures on track for its best week since early April as rate cut hopes are lifting medals across the board for more.

We want to bring in Bob.

I, you know, a path trading partners, co founder and Chief Market strategist Bob.

It's great to see you and talk to me just about this rally.

Let's call a rally that we've seen in gold this week certainly have seen gains in terms of how much upside momentum is left because you talk about the fact that clearly the feds uh path forward here is driving and influencing the price of gold.

But you also got the central banks around the world buying gold and not being a real driver here.

So then what does that upside look like if there's any?

Well to your point?

According to the world Gold Council, largest purchases ever by central banks, largest purchases on record, I guess in 700 BC, maybe a central bank then could have bought more.

But for the record that we have first quarter largest central bank purchases.

So we have that the second thing we have is what I believe to be a reflation narrative just generally across the economy.

And people think gold is an inflation hedge, it is not what gold is is a store of value or an asset anywhere you store money is an asset, your home land, the stock market.

Now that doesn't mean they come without risk, downside risk.

All of those just mentioned do and gold does as well to a certain degree.

Bitcoin is a high beta store of value, gold is the same And if inflation is picking up again, which I believe it is gold will rally as a function of asset inflation.

We all complain about inflation.

I do as well.

I bought a bunch of stakes yesterday.

Really pissed me off.

But when you look at asset inflation that comes with it, those of us that own assets like gold, we benefit from that.

So my target for gold is about 4.8% higher from here.

Very specific 2491.

If you get to 2491 the speculator will probably push it to 2500 just because they like those numbers.

So sticking with gold there.

I'm curious the Chinese central bank is slowing its purchases of gold.

I wonder to what extent stateside buyers of gold?

The people.

Brian Si loves to talk about going to Costco getting those gold bars.

Do they need to worry about that slowdown from foreign central banks?

That's funny.

That's where I got my stakes.

They don't need to do that.

As long as we're going to get this fed rate cut, I, I'm, you know, my job as a strategist is to figure out what's going to happen, not what the fed should do or what markets should do, but what they're going to do, I think the fed is going to cut rates.

The probabilities are rising of that just based on market pricing.

Uh I'm sorry, cut rates.

Did I say raise cut rates?

And if they do that will boost gold?

Because the only time that gold suffers in an inflationary environment which I believe we're still in and we're probably getting a little bit of an uptick on that is if the fed is fighting inflation and right now, the rhetoric is pivoted to the opposite of that.

So despite central banks slowing China being the main one, as you mentioned, Madison, I don't think that's going to slow gold all that much.

It's just going to slow the rise, but I think the rise will still be in place.

Bob, how are you looking at the pickup and buying that we've seen in silver and a lot of that on the back of this rally that we've seen in gold.

Yeah, that gold silver ratio can really widen out, but it really is sort of a a tug on the rope from gold and it's sort of an elastic rope, right?

Silver will snap back.

Silver gets looked at by a lot of speculators and people who want to store in precious metals as the poor person's gold.

For lack of a better phrase, my biggest losing trades have been in silver and simply because I don't understand the juxta position well enough between the industrial properties of silver and the precious properties of silver and which one dominates when.

However, in a reflation narrative, when you're starting to see us PM is manufactured PM, I specifically go back into expansion territory.

Silver's now benefiting from both of them.

Again, I'm not in it because uh if I get in silver, it'll be a losing trade.

That's just the way it's been.

But from that perspective, I think silver's playing catch up but also benefiting from the environment that we're in because of that dual nature of it.

Right?

Well, it's interesting because you are missing out on some of those big gains here to date unfortunately, for you, Bob, but I am not the first time for many of the investors who chat with us, but I'm curious, we're not, we're not seeing a lot of the traditional hedging activity that you think of.

When you think about investors who are concerned about the momentum of a market, we're not seeing people buying volatility, for example, with the V why is gold a better hedge?

Well, I don't know that it is a better hedge.

Again, I think what it is is a lower risk asset that could benefit from inflation and reflation.

So really, I don't know that it is a better hedge for equities falling.

It may not be at this point.

But if equities were to drop, then you're likely to see the fed cut more aggressively and that would benefit gold simply on dollar weakness.

Gold has probably four factors that move it in the short to medium term.

Three of those in my view are pointing to gold being higher.

Now, I'm not, I I own gold.

Full disclosure.

I've owned it since November 2022.

So I don't want anyone to take that and run with it so that my trade gets better.

I just think when I analyze it, there's only one way that gold comes out in the negative and that's if inflation spikes and the fed decides to tighten and fight it, gold will suffer then.

And I don't really see that happening in the near future.

All right, Bob, we're going to have to leave it there.

Thank you so much for joining us.

We really appreciate it.