Gold prices have been scaling fresh highs amid the global market uncertainty, however, some experts point out that a severe correction could be looming amid this gold bull run.
What Happened: While the Gold Spot U.S. Dollar has scaled a fresh high at $3,357.81 per ounce and trades above the 3,300-mark, experts have now started cautioning against this bull run.
According to Patrick Karim, the co-founder of NorthstarBadcharts.com, gold undergoes corrections even during bull markets.
The data shared by him shows that gold prices underwent a correction of over 48% during December 1974 to August 1976, 33% during March 2008 to October 2008, and 22% between August 2020 to September 2022.
Meanwhile, the CEO of Cardone Capital, Grant Cardone said, “gold acting like we in depression. Rates will drop like rock.”
According to data shared by Charlie Bilello of Creative Planning, the inflation-adjusted gold prices were back at an all-time high, after 45 years, surpassing the prior peak from 1980.
Economist Mohamed El-Erian said that the rise in gold prices was a result of the slow and steady diversification away from the dollar by some foreign central banks and others.
This was also confirmed by a study titled ‘Dollar Upheaval: This Time is Different’. The note written by five experts concluded that investors "(i) question the safety of the dollar, not just Treasuries, and (ii) that they perceive these changes to be long-lasting."
"Normally, in times of global volatility… the dollar appreciates as dollar-denominated assets benefit from a flight to safety. Not this time around," the note stated.
Thus, it is evident that investors were preferring gold as a safe-haven asset over the U.S. Treasuries of the U.S. dollar.
Why It Matters: The Gold Spot US Dollar price has rallied 27% from $2,623.81 on Dec. 31, 2024, to $3,332.16 per ounce as of today.
When compared with data from over 25 years, gold prices have skyrocketed 1056% from $288.25 on Dec. 31, 1999. In comparison, the S&P 500 index has risen by 259.1% from 1,469.25 on Dec. 31, 1999, to 5,275.70 as of Wednesday’s close.
Gold prices were on pace to score their best year since 1979, when the prices rallied 126.5% on a year-to-date basis.
Price Action: The gold price was down 0.54% at $3,332.16 as of the publication of this article. Following Gold ETFs have also done well during this bull run.
| Gold ETFs | YTD Performance | One Year Performance |
| Franklin Responsibly Sourced Gold ETF FGDL | 25.78% | 40.86% |
| Goldman Sachs Physical Gold ETF AAAU | 25.37% | 40.32% |
| GraniteShares Gold Trust BAR | 25.42% | 40.40% |
| VanEck Merk Gold ETF OUNZ | 25.24% | 40.15% |
| SPDR Gold Trust GLD | 25.28% | 40.02% |
| iShares Gold Trust IAU | 25.38% | 40.28% |
| SPDR Gold MiniShares Trust GLDM | 25.41% | 40.45% |
| abrdn Physical Gold Shares ETF SGOL | 25.32% | 40.30% |
| iShares Gold Trust Micro IAUM | 25.49% | 40.60% |
| Invesco DB Precious Metals Fund DBP | 21.48% | 29.06% |
The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, fell on Wednesday. The SPY was down 2.22% to $525.66, while the QQQ declined 3.02% to $444.18, according to Benzinga Pro data.
On Thursday, the Dow Jones futures were up 1.04%, whereas the S&P 500 index rose 1.19% and the Nasdaq 100 advanced 1.21%.
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