Barron's: Why Gold Could Hit $4,000
Article by Ian Salisbury in Barron's
Gold is having a great run. A growing club of analysts on Wall Street think it can hit $4,000. Right now, there is little reason to doubt them.
Gold prices climbed 0.1% to $3,354 on Wednesday, having risen five of the past six days. The rally is thanks, in part, to what is happening in Washington.
On Tuesday, the Senate narrowly passed President Donald Trump’s signature tax bill, which could add more than $3 trillion to the national debt. The president also said on Tuesday that he wouldn’t extend his July 9 deadline to strike trade deals with dozens of countries.
These dynamics make it more likely large foreign investors, especially central banks, will continue favoring other U.S. dollar-denominated assets like Treasuries—a key factor in gold’s rally.
Foreign central banks historically rely on the U.S. dollar for hard currency reserves but have been spooked lately by Trump administration policy moves. The People’s Bank of China increased its gold reserves for a seventh straight month in May, despite elevated gold prices. Plenty of other central banks, including those of U.S. allies like ......