As gold continues its ascent, surging past the $4,000 per ounce mark on Wednesday, economist Mohamed El-Erian said that this rally isn’t about fear in the markets, but rather a sign of something much deeper.
Gold’s Rally Not Due To Investor Anxiety
On Tuesday, in a post on X, El-Erian said that while such a record-breaking run-up in gold would typically be read as a sign of investor anxiety, the latest rally is happening in line with other risk assets, “such as the S&P, NASDAQ, Russell, and others,” which he notes are “also trading at or near record highs.”
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As such, according to El-Erian, this has less to do with “unease in financial markets,” as much as it does with “the ongoing fragmentation of the global economic and financial order.”
Samuel Grisanzio of Wolf Financial has responded to El-Erian’s post, saying that this rally in gold isn’t “risk-off behavior,” but is instead just “smart money hedging dollar weakness strategically.”
Gold’s Recent Surge Is Concerning
According to billionaire hedge fund manager Kenneth Griffin, gold’s recent rally is concerning, since it coincides with the U.S. Dollar’s depreciation.
“We're seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize or derisk their portfolios vis-a-vis US sovereign risk,” he said early this week.
In a recent interview, economist Peter Schiff said that the yellow metal’s historic rally is not going to cool down, while making the case for its run up to $20,000 an ounce.
“I think gold is not going to stop going up because the dollar is not going to stop going down. It's not going to stop at $5,000 [per ounce]. It's not going to stop at $10,000. It's going to go higher. I mean, it could go to $20,000,” he said.
Gold prices have surged past $4,000 an ounce of Wednesday, up 1.18%, currently trading at $4,031.3, up 12.25% over the past month, and 53.58% year-to-date.
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