Gold prices have rebounded to $5,201 per ounce but remain notably below the near $5,600 record high seen in January. Despite some investor skepticism about gold's long-term momentum during this consolidation phase, market analysts suggest the current bull market is still relatively young by historical standards.
In a recent precious metals report, Nicky Shiels, Head of Research and Metals Strategy at MKS PAMP, reviewed five gold bull markets over the past 50 years. She noted that, given current momentum, gold and silver prices still have room to rise further this year. The current cycle has lasted 39 months, during which gold has surged over 200%, silver has gained approximately 350%, while the U.S. dollar has declined by 13%.
Shiels stated, "By historical standards, this performance is characteristic of a mid-cycle phase. If gold's trajectory aligns with the average duration and performance of past cycles, it suggests prices could reach $6,750 per ounce by October, around the time of the U.S. midterm elections."
Although precious metals are supported by traditional fundamentals such as interest rate cuts, geopolitical tensions, economic uncertainty, and a weaker U.S. dollar, Shiels highlighted additional factors distinguishing this cycle from previous ones.
She explained that the current macroeconomic backdrop is shaped by several major structural shifts. Global fiscal vulnerabilities are significantly higher than in past cycles: elevated debt levels and persistent fiscal deficits reinforce what many refer to as "fiscal dominance." At the same time, the U.S. is experiencing heightened political polarization, global wealth inequality is worsening, and China's economic strength far surpasses that of past U.S. rivals, such as the Soviet Union in the 1970s and 80s.
Under these conditions, Shiels noted, gold's traditional correlation with real interest rates has weakened, transforming it into a broader "systemic hedge."
Central banks remain a "core anchor" supporting investment demand, as their monthly net purchases effectively establish a higher floor for gold prices. Shiels pointed out, "The scale of emerging market central banks catching up is still substantial: the top 20 emerging market central banks hold about 7,500 tonnes of gold, whereas converging with the average level of developed market central banks would require 22,000 tonnes—equivalent to six years of annual gold supply."
Additionally, retail markets have become more diversified. Strong gold sales at Costco and growing interest in gold-backed tokens on digital exchanges highlight robust physical demand. Shiels remarked that fractional ownership now allows a wider pool of capital to participate.
Finally, she noted that institutional investors remain under-allocated to gold.
Looking ahead, Shiels suggested that further weakness in the U.S. dollar could ignite a new rally in gold prices. She said, "The dollar's decline has been one of the mildest on record (down only 13%), so there is still room for further depreciation if a catalyst emerges."
As of 13:28 Beijing time on February 26, spot gold was trading at $5,201.25 per ounce.
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