The gold market has ignored geopolitical uncertainty in Europe and the ongoing crisis in Ukraine, and instead is focusing on U.S. interest rates and the U.S. dollar, but this trend can’t continue says Jeffrey Nichols, senior economic advisor to Rosland Capital, a precious metal asset firm. “As the dollar has appreciated, gold denominated in U.S. dollars has depreciated – a tendency that has been exacerbated by the pull of higher equity prices and the flow of funds from under-performing gold to over-performing stocks,” he says. “This situation can’t and won’t continue forever. Eventually, markets must reflect realities. The U.S. dollar may be the most attractive – or least unattractive – runner in today’s currency derby, but fundamentally it remains unhealthy.” Nichols adds that gold’s short-term volatility has little to do with its long-term fundamental bullish outlook. “We expect the price of gold will move to new historic highs in the next few years as more people and institutions around the world have the means and desire to hold more of their wealth in gold.”
