Gold smashes through $4000 but $5,000 now "a reasonable waypoint" for yellow metal

GOLD has smashed through the $4000 mark in the ongoing bull run and financial experts have said $5000 gold is now “a reasonable waypoint”, as the price of the yellow metal continues to rise. One said that, in the current economic climate, ”there’s every chance this climb has further to go with no peak in sight.

Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said "gold rising is a sign that investors are losing faith in the direction of the global economy. Big deficits and higher interest bills combined with flatlining productivity are causing a flight to safety.

“This may have seen money flooding into the US dollar but the Trump administration seems determined to reduce the strength of the greenback so it's no surprise that gold is shining.”

Anita Wright, Chartered Financial Planner at Ribble Wealth Management, agreed that $5000 is now a reasonable target: "We now have the classic cocktail that supports the yellow metal: a slowing global economy, rate cuts beginning to appear, inflation proving sticky rather than subdued, and a weakening US dollar.

"That mix is powerful, and it has investors ranging from central banks to private individuals increasing their allocations. Central banks, in particular, have been consistent buyers. Their dollar reserves have steadily declined from more than 75% of holdings at the start of the century to below 50% today.

"The reasons are clear enough: persistent US fiscal problems and the growing unease around dollar “weaponisation.” Wealthy families, especially in Asia and the Middle East, have been moving in the same direction, treating gold less as a speculative punt and more as an insurance policy.

“That is why many observers now see $5,000 as less of a fanciful target and more of a reasonable waypoint, with some even speculating about $10,000 in the event of deepening fiscal and currency strains."

Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said the sky's the limit for gold in the current climate: "Central banks and investors have been piling into gold as uncertainty ramps up. With the US economy looking fragile and the government in shutdown, gold is doing what it does best in times like these.

“Unless we see a major sell-off, which doesn’t look likely, $5000 gold seems priced in right now and there’s every chance this climb has further to go with no peak in sight. The yellow metal has inexorable momentum.”

Meanwhile, Jim Tannahill, Managing Director at high-end pawnbroker, London-based Suttons and Robertsons, said “more people are choosing to borrow against their gold rather than sell it, even with prices at record highs”.

He added: "There’s a growing sense that gold still has room to run, and clients are treating it more as a long-term store of wealth.

"Rather than liquidating gold, owners are leveraging their holdings, in many cases unlocking nearly double the loan value we would have offered just two years ago.

“As economic uncertainty and global political tensions persist, $4000 was always a given and it's now increasingly plausible that gold will reach $5,000 in the near future."

Omer Mehmet, Managing Director at Welling-based Trinity Finance, warned investors about buying at the top: "Gold hitting $4000 shows how jittery global markets are. Investors pile into gold when uncertainty rules, and right now we’ve got plenty of that — from inflation worries to geopolitical instability.

“Talk of $5000 risks ignoring the fact that gold doesn’t generate income, and buying at the top can be a costly mistake. For most investors, gold should be part of a diversified strategy, not the whole plan.”

Meanwhile, Eamonn Prendergast, Chartered Financial Adviser at Bromley-based Palantir Financial Planning Ltd, warned investors about FOMO (fear of missing out).

He said: “Gold glitters as uncertainty bites, but investors should avoid FOMO. Prices are being driven by inflation fears, geopolitics, and central bank demand, but gold should only ever be part of a diversified portfolio. It pays no dividends, so returns rely on price moves.

"Exchange-traded funds (ETFs) held in ISAs or pensions are tax and cost-effective. Most UK gold sovereigns and Britannia coins are exempt from capital gain tax unlike gold bullion. Selling coins can be tricky, online marketplaces carry risk of fraud, while brokers offer quicker exits but often at lower prices.”