Chris Blasi: Gold Bull Run Not Over, “Ultimate Target” Still Much Higher

It was a bumpy week for the gold price, which dropped to the US$4,370 per ounce level midway through the period before rebounding back above US$4,500.

Silver put on a similar performance, bottoming out at US$72 per ounce.

Both precious metals were reacting to a complex array of dynamics, including the latest Iran war developments. The situation continues to fluctuate, and the declines in gold and silver came as the US and Iran exchanged attacks despite the ongoing ceasefire.

At the time of this writing on Friday (May 29), the two countries had reportedly reached a deal to extend the ceasefire by 60 days and start negotiations on Iran’s nuclear program; however, neither side had officially confirmed acceptance, meaning the deal may not hold.

The rise in hostilities boosted the US dollar and oil prices midweek, with those moves increasing concerns about inflation and discussions around higher interest rates.

The release of the latest US personal consumption expenditures (PCE) price index data also contributed to rate conversations. PCE rose by a seasonally adjusted 0.4 percent month-on-month in April, and 3.8 percent from the year-ago period — the highest since May 2023.

Core PCE, which excludes the more volatile food and energy categories, was up 0.2 percent on a monthly basis and 3.3 percent from the same time last year.

Core PCE is traditionally the Fed’s preferred measure of inflation, and market watchers use it to gauge what could be next for rates. In a potential shift, Kevin Warsh, who has taken Jerome Powell’s place at the helm, prefers to look at trimmed averages. That approach removes outlier results, but analysts have suggested it may not provide an accurate picture of what’s happening.

Going back to gold and silver — were this week’s lower prices just a blip on the radar, or do they signal the start of a summer slowdown? I heard from Ronald-Peter Stoeferle of Incrementum and the “In Gold We Trust” report, who encouraged investors to temper their near-term expectations:

“I wouldn’t expect too much for gold and silver over the next couple of weeks. Probably after the World Cup is done — I think then perhaps there’s going to be more upside, but that’s just correlation, not causation. Historically, mid-summer, somewhere at the end of July, beginning of August, has often been kind of the bottom for gold and silver, and especially the miners.”

Looking longer term, Stoeferle’s outlook is much stronger — he believes this is a “golden decade” for gold, and said that the metal is on track to meet his target of US$8,900.

Speaking of seasonality, I also heard this week from Justin Huhn of Uranium Insider.

As always, he gave a great overview of uranium supply, demand and price dynamics, emphasizing his bullish long-term outlook. But Huhn also said the market’s cyclicality makes it “very tradable” — and in his view, right now could be a good time to consider buying low:

“It can be difficult to put money to work when the sector has pulled back, when…