In 2026, gold According to Goldprice.org, the trade is down as much as 18% from its 10-year high of more than $5,300 an ounce at the start of the year, making it a difficult trade to time. But last week was the best week for precious metals since January, while gold mining stocks posted their hottest five-day rally since 2008. Due to the volatility of gold trading, gold’s year-to-date returns are currently roughly flat, with some betting that the direction of the trading chart will continue to rise. However, there may be pitfalls lurking ahead. After all, despite recent dramatic moves, the price of gold is still up more than $1,000 over the past year.
“Gold is the new money,” said Pippa Malmgren, a former special assistant to President George W. Bush and a member of the National Economic Council.
Malmgren says what attracts investors to gold hasn’t changed. Many fear that government spending will get out of control in the United States and that growth will slow elsewhere. “This suggests inflation,” Malmgren said. He added that the Trump administration’s pursuit of costly foreign wars and its embrace of cryptocurrencies have both increased anxiety among some investors.
“This is causing nervous investors to look to conservative ways to preserve value, such as buying gold,” Malmgren said. Meanwhile, central banks around the world have expanded their gold holdings, he said, further signaling a loss of confidence in fiat currencies as China continues to buy gold.
“Central banks never stopped buying,” said Patrick Kennedy, founder and managing partner of Hartford, Conn.-based Allsource Investment Management. “The People’s Bank added 19.9 tons in July, the largest month since October 2023 and the 21st consecutive month of additions,” Kennedy said.
This bullish stance is echoed by billionaire hedge fund manager John Paulson. He recently told CNBC that gold is only in the early stages of a long-term rally, citing a loss of confidence in paper money and runaway government spending (Paulson has been a gold bull since 2009).
While fear has historically been the driving force behind gold rush sentiment, Joe Cavatoni, senior market strategist at the World Gold Council, said he sees the recent rally by U.S. investors as more of an opportunistic trade.
“Gold’s recent rally appears to be driven by changing expectations around interest rates and the economy, rather than fear alone,” Cavatoni said. “There are signs of weakness, particularly on the employment front, and markets are reacting quickly. Gold is reacting as you would expect from a macro-sensitive asset as investors adjust their interest rate outlook,” Cavatoni said.
“My sense is that the U.S. flow driving this movement is more tactical in nature, as GLD options activity has increased while buying from Asia and Europe has tended to be more persistent,” Cavatoni said, referring to the inflows into the SPDR Gold Stock ETF.GLD), investors in both regions are increasing their holdings.
Gold’s appeal relative to other interest rate-sensitive assets and a weaker U.S. dollar has generally increased as the latest inflation figures have been viewed as tame by markets and expectations for Fed rate hikes have waned.
“I don’t see gold as just a safe-haven asset. Many investors are using gold as a wealth preservation tool and to help diversify their portfolios amid continued uncertainty around growth and policy,” Cavatoni said.
Kennedy said the recent inflows into ETFs, which hit six-week highs, were driven by professional money, not just personal money tracking.
GLD rose about 1% on Wednesday.
Performance of SPDR Gold Shares ETF over the past 5 years.
Expectations for rate hikes had been falling even before the latest inflation data, having fallen more than 20 percentage points in the past week, said Nick Cawley, a contributing analyst at Salomon Global, a UK-based bullion dealer.
“This suggests that the market is becoming more wary of further U.S. interest rate hikes,” he said, pointing to recent inflation data and the soft trend in nonfarm payrolls last Friday.
Kennedy said his firm’s view was that gold’s decline in the first half of the year was a buying opportunity rather than a sign of a ceiling. “We bought and added to GLDM from the technical bottom in July,” he said, referring to GLD’s other share class, which has a lower expense ratio.
But he said lower expectations for rate hikes does not equate to the Fed’s willingness to cut rates. “At least for now, this is not a rate cutting trade. The Fed has been holding rates at 3.50-3.75 all year, and September was the real deal for rate hikes right up until the paychecks,” Kennedy said.
“What has changed is that the rate hike tail risk has come out of the market,” Kennedy said, noting that this morning’s CPI was consistent at 0.1% monthly, 3.4% annualized and core 2.5%, indicating a continuation of the story. “This is a different setup than a cutting cycle, which is important when you’re asking whether this has legs or not,” Kennedy added.
From a technical perspective, a break above last week’s 50-day moving average and a break from this year’s high-low pattern should support further gains, said Kawley, who expects any pullback to be short-lived and seen as an opportunity for gold to re-enter the next high.
Gold miners see growing investor interest
Vince Stanzione, an independent trader and author of “The Millionaire Dropout,” says some traders and investors are turning to gold mining stocks for value in the stock market.
Mr. Stanzione pointed out that “many high-quality mining stocks are trading at single-digit forward P/E ratios and paying large dividends.” anglo gold ashanti S&P 500 member Newmont. He added that many retail traders prefer to use ETFs, the most popular being VanEck Gold Miners (GDX) covers large mining stocks, including Van Eck Jr. Gold Miner (GDXJ), which is intended for junior miners.
“Many gold miners also have exposure to silver, and silver moves in sync with gold,” Stanzione said. last week, silver It was the best week since February.
Sean Young, principal analyst at crypto trading platform MEXC Research, says there are multiple options for retail investors to execute bullish trades in gold. Bullion ETFs such as GLD and iShares Gold Trust (IAU) is the most direct way to express how you view money, Young said.
GLDM, President Kennedy’s preferred gold ETF, has an expense ratio of 10 basis points, compared to GLD’s 40 basis points and IAU’s 25 basis points. “If you want to buy and hold, GLDM is cheaper, but if you need liquidity and options, GLD is a better product,” he said.
iShares Silver Trust (SLV) offer a more volatile route into precious metals, while GDX and GDXJ offer operating leverage and equity risk beyond the price fluctuations of the underlying metals, Young said.
According to Young, this leverage works both ways. If gold prices rise while mining costs remain stable, profit margins can expand much faster than the metal itself. So funds focused on miners tend to swing more in either direction than bullion.
“GDX moved about three times as much as gold last week…and juniors are even more violent,” Kennedy said. “For most retail investors, miners are in a satellite position rather than a core position,” he added.
5-year performance of the Van Eck Gold Miners ETF.
Cavatoni said the upcoming U.S. Federal Reserve meeting in Jackson Hole, Wyoming, and broader policy developments could lead to more volatility in gold prices as they determine whether the rally continues.
New Fed Chairman Kevin Warsh, who is communicating with markets in new ways, is a big factor. “The new Fed chair has changed the landscape of the market,” said Eugenia Mikuliak, founder and executive director of B2 Prime Group, a brokerage platform for asset trading including precious metals. Warsh’s “cautious and often vague statements” (including at the first Fed meeting), Mucriak said, hit stocks hard, and gold began to rise as a side effect of this change in Fed leadership. When markets are uncertain about central bank policy, money moves out of stocks and into safer instruments such as gold and other metals.
President Kennedy agreed that uncertainty over the Fed could be bullish for gold. “In a labor market that is visibly softening, the Fed chairman is sending a long-term rally signal. This is a stagflation picture, and when markets start to question whether the Fed can accomplish both of its mandates, gold tends to perform well.”
“Gold more than doubled between the end of 2023 and the record in January, and it moved up the rankings, so we needed to unwind that,” Kennedy said. His view remains that nothing broke in the long-term long-term case for gold. “If anything, the dynamics have accelerated. Brent is near $90 with the Strait of Hormuz still closed and Iran holding on to its conditions for reopening the strait. So, despite the cool July print, inflation risks going forward remain.”
Mikuliak said inflation will continue to loom large in this situation and gold has additional runway if the market outlook continues to be for modest price increases. He added, “There is a possibility that the price could even exceed January’s high.”
Continued buying in China and India, which remain the main centers of physical gold demand, will support prices. Looking at the year-to-date trading chart, “prices are at relatively low levels, but could go higher,” Mikuliak said.
