Speaking ahead of the US Federal Reserve's much-anticipated September meeting, John Reade, senior market strategist at the World Gold Council, shared his thoughts on where gold is in the current cycle.
"Coming up to what is widely expected to be the start of a US rate-cutting cycle, ironically you could actually say that gold is early in the cycle. Gold typically performs pretty well when rates are cut, and if those rate cuts lead to weakness in the US dollar, which they certainly might, that could be a double tailwind helping the metal from here," he explained.
Reade added, "So this cycle's been quite different, and that makes answering (the) question quite tricky."
When asked about gold price drivers, he said emerging markets have been top of mind this year.
"Gold has been able to ignore some of the classic macro drivers — the strength of the dollar, high US interest rates, European interest rates — but that may be changing now," Reade told the Investing News Network.
However, in his view a shift could now be taking place, "As emerging markets are slowing somewhat, and interest rates are starting to come lower in the west, we might see a reversion to what is typically seen as the driver of gold — so slavishly following the US dollar and moves in interest rates and interest rate expectations," he said
"I'll reiterate — I think it's going to be western macroeconomic factors that probably take the lead in determining gold's direction for the balance of this year and into 2025," Reade emphasized.
Watch the interview above for more of his thoughts on gold demand and price factors.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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