Gold Hits Record, Einhorn Sees $3,500 Amid East's Rush

Key Takeaway

• Gold prices soar, reaching record highs in 2024 due to Eastern countries' buying spree and central bank stockpiling, driven by de-dollarization trends.
• Billionaire investor David Einhorn highlights a "secular trend" of East buying gold from the West, with China's reserves up 16% in 17 months.
• Market expert Ed Yardeni predicts gold could reach $3,500 within a year, drawing parallels to the inflation patterns of the 1970s.

Gold's Record Surge

Gold has reached unprecedented highs in 2024, driven by a mix of de-dollarization, central bank purchases, and robust demand from Eastern countries. Billionaire investor David Einhorn highlighted a "secular trend" of gold moving from West to East, with China, India, and Singapore notably increasing their gold reserves. This shift is part of a broader strategy to hedge against global economic uncertainties, pushing gold prices upward. Market expert Ed Yardeni predicts gold could soar to $3,500, drawing parallels to the inflationary patterns of the 1970s.

Central Banks and Investors Rally Behind Gold

The surge in gold prices has caught the attention of both central banks and high-profile investors. China's significant increase in gold reserves, along with similar moves by India and Singapore, underscores a strategic pivot towards gold in response to global economic turbulence. Esteemed investors like David Einhorn, Peter Schiff, and Ray Dalio have advocated for gold as a hedge against inflation, with Einhorn specifically loading up on gold in anticipation of inflationary pressures. This collective shift towards gold underscores its perceived value as a safe investment amidst uncertain economic conditions.

Price Dynamics and Market Sentiment

Despite a slight dip, closing at $2,328.94, gold's price action remains strong, with a 52-week range between $1,810.75 and $2,431.02. This resilience is noteworthy given the broader macroeconomic context, including inflation concerns and adjustments in Federal Reserve rate cut expectations. The market's anticipation of only one Fed rate reduction this year has influenced gold's appeal, yet its year-to-date surge of over 13% highlights strong demand and central bank activity as pivotal factors supporting its price.

Street Views

• David Einhorn (Bullish on gold):

  "Perhaps the West is running out of gold it is willing to sell, while Eastern demand has remained strong enough to force the price higher."

• Ed Yardeni (Bullish on gold):

  "Foresees the possibility of gold reaching $3,500 within the upcoming year, indicating a potential 50% increase."