After achieving nearly 30% gains in 2020 and setting a new all-time high price record, gold has taken some time to cool off in 2021.
However, within the past week, gold surged to reach a five-month high, and some experts believe this could be the beginning of another massive run-up for the precious metal.
Although many factors support their reasoning behind another possible bull run for gold starting this holiday season, there are two primary catalysts we want to cover today.
Reason #1: Inflation Crisis
The first one, inflation, is a topic that most are used to hearing about, especially since the pandemic began.
In a recent CNBC article, expert Will Rhind commented:
“I’m very positive on the outlook for gold for next year, and the reason is because of what’s going on with the macro environment, particularly inflation.”
And with inflation hitting an annual high this year of 6.2% (which also happened to mark its most significant annual increase in more than 30 years), his comment doesn’t seem off.
“We have real inflationary pressures that, the longer they persist, the more of a problem that causes and the more people will look for inflation hedges,” followed Rhind.
We are facing what is supposed to be one of the most expensive holiday seasons we’ve ever experienced in decades; the question is, how much more will inflation rise to?
A major factor that will influence the future of gold prices is the path the Federal Reserve decides to take with monetary policy.
With or without an official acknowledgment from them that the current inflation data is a serious problem, people historically turn to gold in times of stress and uncertainty.
Reason #2: Rising Jewelry Demand
The second factor which is believed to ignite another bull run for gold is the demand for jewelry.
Many may not be aware of the little-known fact that jewelry accounts for 50% of global gold demand.
The reasoning behind the optimistic outlook for the next six months of gold’s price movement is due to India’s festival and wedding season that is underway.
And piggybacking off these holidays lies China, the world’s fastest-growing market for gold.
Strategist George Milling-Stanley believes the Chinese New Year and gift-giving season is another catalyst that could propel the precious metal demand.
Given the supply chain disruption, labor shortages, and soaring consumer prices, it’s no surprise that 60% of Americans don’t have much trust or none at all with the Fed.
Learn how American Hartford Gold is helping Americans protect their wealth and retirement with assets like gold by calling 800-462-0071.