Gold is on the verge of new all-time highs. The metal of kings has already broken out to new all-time highs in many world currencies – the last yet most important will be gold as priced in US dollars.
On the heels of the 0.25% interest rate hike by the Federal Reserve, yet amidst clear signals that the central bank is ready to print new money to support the financial system after the failures of Silicon Valley Bank and Signature Bank, gold rose $30 or 1.5% to close at $1,970 per ounce in the spot market on Wednesday.
Let us observe gold as priced in several world currencies, so that we may gain a glimpse of what is in store for gold in US dollars over the months ahead…
Gold in Japanese Yen
First, gold as priced in the Japanese currency has just broken out to a new all-time high, eclipsing the former peak of 255,000 yen per ounce set in 2022. As this is being written, gold is trading at 258,000. We now have an official target of 278,000 yen for gold in the Japanese currency.
Gold in Australian Dollars
Second, gold as priced in Australian dollars has just broken out to a new all-time high, eclipsing the former peak of $2,873 set in 2020. As this is being written, gold is trading at $2,964. We now have an official target of $3,560 for gold in the Australian currency.
Gold in British Pounds
Third, gold as priced in British pounds has just broken out to a new all-time high, eclipsing the former peak of 1,578 pounds set in 2020. As this is being written, gold is trading at 1,631 pounds. We now have an official target of 1,960 pounds for gold in the British currency.
Gold in Euros
Gold in the common European currency has not yet broken out to a new all-time high, but it on the verge of doing so. The former peak set in 2022 was 1,902 euros, and gold has recently traded as high as 1,886 euros. Our expectation is that gold is within months of making a new all-time high in the European currency, after which the price should be expected to trend into the mid-2,000 range per ounce as measured in euros.
Gold in US Dollars
With clear evidence that gold has either already broken out to new all-time highs, or is on the verge of doing so, within all of the world’s major currency crosspairs, it should logically be expected that it is simply a matter of time before gold breaks out in the most important currency, the US dollar.
Turning our attention to the gold in US dollars, we note that gold has recently traded as high as $2,009 per ounce in the US currency. This marks the third time in three years that gold has attempted to establish a sustained break above the psychologically important $2,000 mark.
Takeaway on Gold
The Federal Reserve is losing credibility in its fight against 40-year high inflation, as it begins to print new money once again to bail out the banking system, following the collapses of Silicon Valley Bank, Signature Bank, and Credit Suisse.
Gold is responding to this increase in money creation by having already broken out to new all-time highs in several major world currencies. Further, it is on the verge of doing so in several others, including the US dollar.
Investors should be using any final pullback in the gold price over the coming months to finalize their precious metals positions, because once gold breaks out, it may not look back.
While bullion should be expected to rise by 20% - 25% following gold’s breakout, mining companies, which are leveraged to the underlying metal price, have the potential to rise 100% or more during this same time period.
Words by Christopher Aaron, analyst and advisor at iGold Advisor; Source: Gold Eagle