Infrastructure Capital Advisors CEO Jay Hatfield hasn’t been long on gold options in recent history. Hedge funds have the most net-long bullion positions in more than four years. On Friday, just before Jerome Powell’s speech at Jackson Hole, Citigroup released a note saying inflows into precious metals ETFs will expand “significantly” in the next six to 12 months. Citi targets a $3,000 spot price within 12 months.
SPDP Gold Shares (GLD), the most popular gold-backed ETF, has grown for eight straight weeks, marking the most continual inflows since the middle of 2020, according to Bloomberg.
Gold is the place to be
All signs point to a move higher in precious metals as the dollar weakens and the Fed prepares to loosen its monetary policy further.
“Everybody thought the Fed was going to be the last to cut, but now they’re getting in line,” Hatfield told Bloomberg.
In April, Goldman Sachs called for the price of gold to reach $2,700 an ounce. With gold continually approaching all-time highs, now at $2,525 in early Monday trading, it seems the bank was on the right track with its prediction.
UBS has also released bullish predictions on gold, claiming it expects the precious metal to reach $2,600 by the last quarter of 2024. Wayne Gordon, a commodities strategist with the investment bank, told Bloomberg that increasing geopolitical risks should only bolster demand for portfolio hedges.
Physical ETF market is getting bigger
Ryan McIntyre, managing partner at Sprott Inc., told Bloomberg, “It’s really notable that people are actually starting to move to that physical gold ETF side now. Buying through the ETFs is going to be a big, big part of gold’s story.”
If Treasury yields drop as expected, the dollar continues its poor performance and now bullion exchange-traded funds see major inflows, it could be the spark gold needs to make Citigroup’s prediction of $3,000 an ounce come true.