Gold Climbs to Record High Above $3,800 on Weaker Dollar

Watch Gold Climbs to Record High Above $3,800 on Weaker Dollar - Bloomberg on Dailymotion

Transcript

00:00We're seeing gold marching higher again as that potential government shutdown and also the weaker

00:06U.S. dollar pushes the metal to a fresh record. Joining us now is Bloomberg Metals and Mining

00:11reporter Jack Ryan. So we're firmly above 3,800 now, Jack. Why is it just purely the government

00:18shutdown of the weaker dollar? Are there other factors pushing this metal higher?

00:22Well, really, over the last few weeks, it's been exchange traded funds. So basically a big pile

00:30of gold and you own a share of it. That's really what's been driving the gains they've had. I think

00:36the highest gains in about three years this month so far. We'll see how the rest of the month plays

00:40out. And that really shows you that it's Western investors in particular as of late who have been

00:46buying into gold. And that has been driving it higher. Around that, you have the Fed has resumed

00:53rate cuts. We know that's good for gold because gold doesn't pay you an interest rate. And then

00:58also, I think the firing of or the attempt on the firing of Lisa Cook was a key moment because it

01:05really highlighted this Goldilocks scenario for gold, which could be high inflation and low rates.

01:12So you get gold to hedge your inflation and you don't have high rates making cash more appealing.

01:17And so that, I think, is what's happened over the last couple of weeks. Now, we have been talking

01:22about gold really all year, even though it's gone up sort of at a measured pace. It's still gone up

01:27quite substantially. I mean, we're coming up on, you know, 45, 50 percent here. Does the market think

01:32this rally has gone too far and maybe even too fast? Absolutely. I mean, you can broaden it out. You can

01:38look back to late 2022. It's more than doubled since then. Obviously, at this point, then you would

01:43have to start asking questions. Is it overbought? I think when you look at some of the data, for

01:48example, exchange traded funds holdings, they've been increasing very fast, but they're not at their

01:53high point. Central bank buying has been elevated for a while, but it has remained quite consistent. If

01:59you look at the positioning data from hedge funds on the futures market, they're not overextended. And so

02:05you have, for example, Goldman Sachs, they predict 4,000 by the middle of next year. And they're

02:11pointing to this really key trend, which is actually really driven the broader rally, which has been

02:15central banks buying. Yes. And they say they can see that continuing for another three years. So

02:20yeah, we're still uncertain, but a lot of banks say it still has room to run.