Some Say Gold’s Epic Run Is Ending. Are They Right?

And just like that, a wave of chatter suddenly has ensued suggesting gold’s epic run is at an end and that investors should expect prices of the metal to decline significantly in the years ahead.

Among the most prominent voices forecasting the demise of the gold bull are those at Citi. Last month, Citi’s global commodity team essentially said gold’s done all it’s going to do, and that by the end of next year investors could see the price of gold roughly 25% below present levels.

The culprit, say Citi strategists, is a peak in the demand for gold as a safe-haven asset and hedge against economic and geopolitical distress. Citi believes the risk premiums that have benefitted gold for so long – particularly those rooted in tariff-policy distress and high-profile military conflict – are in the process of abating as the feared worse case scenarios now seem unlikely to be realized.

Global Banking Giants See Gold Losing as Much as 30% From Here

Citi thinks we could see gold reach as low as $2,500 per ounce as 2026 closes out, with the bank expecting “to see the President Trump popularity and U.S. growth ‘put’ kicking in, especially as U.S. mid-terms come into focus.”

Still another prominent voice forecasting substantially lower gold prices in the years to come is that of James Steele, chief precious metals analyst at HSBC. Like the analysts at Citi, Steele has grown dismissive of concerns about debilitating global trade conflict manifesting, given President Trump’s demonstrated willingness to seek compromise in the interest of avoiding economic bloodshed.

Steele has made particular note of the simultaneous disinclination of risk assets to fold and of gold to retest the all-time high of $3,500 first reached in April as evidence that investor demand for safe-haven protection is waning.

As for his long-term outlook for the yellow metal, Steele is even more bearish than Citi, expecting to see gold drift as low as $2,350, which would translate to a 30% drop from present levels.

So…what of the prognostications that the gold bull is, indeed, on his last legs and approaching the point of exhaustion?

Are they correct?

There’s no way to know for sure right now, of course. But others who’ve been at this metals game for some time appear to be channeling Mark Twain right now, believing that rumors of the gold bull’s (impending) death have been greatly exaggerated.

Noted Metals Analyst Dismisses Big-Bank Projections of Gold Dive: “Their Default Mode Is Skepticism

One of those entirely unconvinced that gold’s run is nearing an end is Brien Lundin, editor of Gold Newsletter and host of the prestigious New Orleans Investment Conference.

During a recent appearance on the Money Metals Podcast with analyst Mike Maharrey, Lundin was unfazed by the “doom-and-gloom” outlook for gold on the part of those such as Citi and HSBC, suggesting that concession to an historically gold-averse posture is to be expected of many institutional investors.

“Their default mode is skepticism,” said Lundin. “Even when gold hit $3,500 earlier this year, they were late to the party.”

Lundin thinks those who see gold’s viability largely in terms of shorter-term drivers such as tariff distress are making a mistake, because doing so is blinding them to the more foundational influences on the metal that he and others believe keeps it viable through at least the foreseeable future.

Among those foundational influences, says Lundin, is central bank gold demand, which has been at or near record levels since 2022 and is projected to remain exceptionally vigorous through at least the end of next year. According to the World Gold Council’s recently released 2025 Central Bank Gold Reserves Survey, fully 95% of respondents said they believe global central bank gold reserves will increase over the next 12 months, while analysts at J.P. Morgan are among many who expect annual central bank gold consumption to remain around the 1,000-metric-ton pace through 2026.

“This is the first bull market in modern history driven by central bank demand,” Lundin noted during his podcast appearance. “They’re not emotional. They buy for strategic reasons and they don’t stop on corrections.”

J.P. Morgan Projects $4,000-Plus Gold Next Year Largely on Strength of Central Bank Demand

Note, however, that it’s not just metals-centric analysts such as Lundin who expect gold to continue demonstrating impressive resilience through the foreseeable future.

During a recent appearance on Bloomberg Television, Grace Peters, global head of investment strategy at J.P. Morgan, said she sees gold surpassing $4,000 within the next 12 months. And like Brien Lundin, Peters believes relentless central bank demand will underpin the achievement of that price target.

“Looking 12 months forward, north of $4,000, we think, would be a new reasonable price target for gold, with key drivers being still emerging market central banks,” Grace Peters said. “When you look at EM (emerging market) positions versus DM (developed market) central banks, there’s quite a lot of room still for EM central banks to position closer to where their DM counterparts are.”

My Take: Gold Should Continue to Thrive as Long as Its Structural Drivers Remain Intact

In my opinion, it is difficult to argue against a structural bull case for gold, even after all the metal has accomplished during what has been a run for the ages already.

The expectation that we’ll continue to see high levels of gold demand by central banks – institutions which are so price insensitive that they can keep buying the metal without regard to how expensive it becomes – clearly is a part of that structural case. But so, too, of course, are the reasons why central banks are devouring gold, including growing geopolitical risk in a deglobalizing world, concerns about dollar stability amid surging U.S. debt loads, and anxiety over heightened political risk in developed economies.

These are among the most valid and deeply rooted reasons for owning gold. And the expectations of their continued relevance mean they can and should continue to drive gold demand not only among central banks, but among sovereign wealth funds, institutional investors and even retail investors…a broad-based wave of gold demand which is likely to push the price of the metal to $4,000 and beyond in the years to come.

This post is created and published for general information purposes only. The Gold Strategist blog and Bob Yetman disclaim responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

July 9, 2025

Economic Week in Review: Nonfarm Payrolls Surprise to the Upside, Private Sector Jobs See First Drop in Years, Manufacturing Keeps Struggling, and More

Hello, my friends!

This was, of course, an economic week shortened by the July 4^th holiday, but there still was no shortage of high-profile data to process, including several key updates on the health of the labor market.

June Nonfarm Payrolls Crush Estimate, but Report Yields Disquieting Details

On Thursday, the Labor Department released the week’s highlight economic data report – nonfarm payrolls for June – which revealed a bigger-than-expected increase in jobs last month.

The government’s numbers showed that the economy added 147,000 jobs in June…slightly more than the 144,000 picked up in May and a lot more than the consensus estimate of 110,000.

Notable, too, was where the official unemployment rate landed: 4.1%, which was a wholly unexpected improvement on May’s 4.2% rate. Heading into the week, economists were looking for headline U-3 unemployment to have ticked up in June to 4.3%.

While the report’s macro numbers were largely praised by observers, a closer look at the data reveals a jobs picture that’s not all sunshine and roses.

For one thing, the surprising drop in the unemployment rate was attributed to a decline in the number of people looking for work. According to the data, the percentage of Americans aged 16 and older who were working or looking for work in June fell to 62.3%…the lowest level since December 2022. The number of people who hadn’t looked for a job in the previous four weeks jumped by 234,000 to 1.8 million.

Other potentially concerning information conveyed by the report includes the percentage of unemployed workers who’ve been jobless for 27 weeks or longer – that rose to 23.3%, which is the highest it’s been in nearly three years. Also, jobs in the manufacturing sector…responsible for 10% of the nation’s economic output…sank for the second straight month. And the length of an average workweek declined by one-tenth of an hour last month, to 34.2 hours total.

Job Openings Surge in May…but Hiring Rate Remains at Lowest Levels in Nearly a Decade

Other widely followed jobs numbers released this week also seemed to imply a labor market that simultaneously remains resilient and a bit fragile.

One of those metrics is the May Job Openings and Labor Turnover Survey – known less formally as the JOLTS report – released on Tuesday by the Bureau of Labor Statistics.

According to the data, job openings in May unexpectedly rose to 7.76 million…a six-month high that’s well above the 7.39 million openings posted in April and considerably more than the 7.3 million openings projected by economists.

Still, openings, overall, remain about 35% below where they were three years ago. And while job openings have ticked up, at 3.4% the hiring rate remains around its lowest level in nearly a decade.

Layoffs, however, dropped to 1.6 million in May, putting the rate of layoffs near all-time lows and making the unfortunate hiring rate appear less ominous.

“Hiring remains depressed, but that is less worrisome than it would be otherwise because layoffs continue to be low,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

Private Sector Payrolls Post First Decline in More Than Two Years

Another popular measure of labor market strength, the National Employment Report from payroll processor ADP, also appeared to convey the image of a jobs picture that’s both steady and uncertain.

According to the report released on Wednesday, the private sector lost 33,000 jobs in June, the first outright decline since March 2023. That’s well off May’s uptick by 29,000 jobs and an obviously big letdown from the increase of 95,000 jobs that had been the consensus estimate of economists polled by Reuters.

Dr. Nela Richardson, chief economist at ADP, noted that while uncertainty continues to permeate the macro job market, that same uncertainty is keeping layoffs in check as employers struggle to navigate the economy right now.

“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” said Richardson.

In fact, planned job cuts by U.S. employers saw a big drop in June according to global outplacement firm Challenger, Gray & Christmas, declining by 49% from May to land at 47,999.

Chicago-Area Manufacturing Activity Sinks Deeper Into Contraction Territory

This week also saw the release of a couple of key measures of manufacturing activity; one regional and one national…but neither particularly hopeful.

First up was the June Chicago Business Barometer, known less formally as Chicago PMI (Purchasing Managers’ Index), released on Monday by the Institute for Supply Management (ISM).

ISM reported that the metric came in last month at 40.4…a tenth of a point below the May reading but well below the 43.0 projected by economists polled by The Wall Street Journal.

In addition to falling short of economists’ forecast, last month’s number marked not only the lowest for the barometer since January but also proved to be the 19^th straight month the index landed below the critical level of 50 that distinguishes contraction from expansion in the manufacturing sector.

Notably, in response to a survey question asking Chicago-area business owners how they see their own business activity growing in the second half of the year, 45% of them said they expect to see either no growth or a decline in activity through the rest of 2025.

Nationwide Manufacturing PMI Contracts Fourth Straight Month and 29^th Time in Previous 32 Months

The following day, Tuesday, ISM was back to provide the latest update on production activity throughout the country with the release of its proprietary Manufacturing Purchasing Managers’ Index for June.

Although the index landed at 49, putting it in contraction territory for the fourth straight month as well as for the 29^th time in the last 32 months, the number was a slight improvement over both April’s 48.5 reading and the 48.8 measure projected by economists.

“In June, U.S. manufacturing activity slowed its rate of contraction, with improvements in inventories and production the biggest factors in the 0.5 percentage point gain in the Manufacturing PMI,” noted Susan Spence, chair of the ISM Manufacturing Business Survey Committee.

However, the better index numbers seem to belie considerable frustration and even worry on the part of many U.S. producers, with one survey respondent saying:

“Tariffs, chaos, sluggish economy, rising prices, Ukraine, Iran, geopolitical unrest around the world — all make for a landscape that is hellacious, and fatigue is setting in due to dealing with these issues across the spectrum. Unfortunately, this is just the beginning unless something drastically changes.”

That’s it for now; enjoy the rest of your holiday weekend!

July 5, 2025

Gold’s Improving Viability as a Long-Term Asset

Is gold on the way to becoming a universally regarded core portfolio component – even a mainstream asset?

Among the more compelling pieces of evidence in support of that idea is the metal’s improving reliability as a long-term capital appreciation instrument, a virtue highlighted in a recent Forbes piece by Alex Shahidi, managing partner and co-CIO at Evoke Advisors.

“Since 1971, when the U.S. came off the gold standard, the precious metal has delivered strong, competitive returns,” Shahidi writes, “nearly matching global equities over the long term, with annualized returns of 8.4% compared to 9.2% for global stocks.”

Shahidi’s assessment comes on the heels of a similar conclusion drawn by the World Gold Council. In a report published earlier this year on gold’s appropriateness as a strategic long-term asset, the WGC said:

“Looking back over more-than half a century since the US gold standard collapsed in 1971, the price of gold in US dollars has increased by 8% on an annualized basis – a performance comparable with that of equities and higher than that of bonds over the same period.”

The WGC also crowed about gold’s “shining” performance through a variety of more recent time frames, noting:

“Gold has performed well over the past 1, 3, 5, 10 and 20 years, despite the strong performance of risk assets.”

Analyst: Since Millennium’s Start, Gold Has Returned 10.1% Annually vs. 5.9% for Global Equities

Of particular note is just how well gold has performed since the beginning of the millennium, something else of which Shahidi makes specific mention:

“Notably, since the turn of the millennium, gold has significantly outpaced equities, delivering 10.1% annual returns versus just 5.9% for global stocks, by my calculations. This remarkable track record highlights gold’s enduring value as an investment, especially in the modern era.”

Gold’s impressive performance numbers over the last quarter-century highlight something else: the significantly greater prominence of uncertainty on the global economic and geopolitical stage.

To be sure, gold has a multitude of impactful drivers…including consumer demand, which is an influence that’s far more relevant during robust economies; not exactly the periods during which a perceived safe-haven asset is expected to thrive.

In fact, the WGC details, consumer demand – rooted in gold’s utility to both the technology and jewelry industries – accounts for roughly 40% of the metal’s overall demand.

Still, it remains gold’s appeal as a crisis asset…an asset inherently poised to strengthen amid distress, both real and feared…that appears to be its most dynamic catalyst. And in an environment characterized by greater overall and chronic uncertainty, one might expect gold to, in turn, post better numbers over extended periods.

Coincidence? Gold’s Long-Term Performance Has Improved With the Surge in Global Uncertainty

That’s exactly what it’s been doing. As Alex Shahidi points out, gold has managed to best global stocks – in terms of average annualized returns – by roughly 70% since 2001; a period, not so coincidentally, that has seen popular uncertainty metrics – including the World Uncertainty Index and Economic Policy Uncertainty Index – rise to their highest recorded levels, fueled by a seemingly endless string of profound global shocks that include:

the 9/11 attacks;
the global financial crisis;
the COVID-19 pandemic;
Europe’s largest ground war since World War II;
and obscene levels of fiscal profligacy poised to trigger a massive global debt crisis.

Chart courtesy of Economic Policy Uncertainty

Central Banks Have Been Net Purchasers of Gold Every Year Since 2010

It is, in fact, this rising uncertainty – particularly that which threatens dollar reliability and stability – that’s largely responsible for another highly impactful source of gold demand: central banks. Central banks have been net purchasers of gold every year since 2010. And since 2022…the same year Russia saw half its global reserves frozen by the West as punishment for Moscow’s invasion of Ukraine…central bank gold demand has been at or near record levels, something Alex Shahidi references in his public embrace of the metal.

“With its surprisingly strong historical returns over the long run, high liquidity and strong central bank support, it can be a valuable portfolio tool that offers diversification, inflation protection and stability during market turmoil,” Shahidi writes, adding:

“While not a conventional holding for all investors, gold’s unique attributes and proven track record make it worth considering as part of a well-diversified investment portfolio.”

For that matter, Shahidi’s pro-gold posture is hardly “conventional” for a key person at a billion-dollar asset manager. But in the words of the immortal Bob Dylan, the times they are a-changin’. And the way in which they’re “a-changin’” suggests the possibility that uncertainty might become a permanent part of the global landscape.

Should that disconcerting eventuality come to pass, then gold may be viewed not only as a standard portfolio holding, but also as a hedge deemed so critical that those advisors who opt against owning it on behalf of their clients could one day be seen as negligent for refusing to do so.

July 1, 2025