Gold rally "fundamentally supported for now," AHG President tells Investing.com

Investing.com - Gold’s rally this year looks "fundamentally supported for now," providing that current economic and policy conditions hold, according to Max Baecker, President of precious metals retailer American Hartford Gold.

"Elevated inflation, growing sovereign debt, persistent deficits, and global uncertainty all strengthen gold’s appeal as a safe-haven and an inflation hedge," Baecker told Investing.com, adding that "central bank buying and strong technical momentum" provide additional support.

On Wednesday, gold prices rose as heightened concerns over stretched fiscal spending in the developed world, especially Japan, helped underpin bids for safe-haven assets.

Uncertainty has also surrounded a December interest rate cut by the U.S. Federal Reserve, as policymakers grappled with signs of labor market weakness and an only recently-ended blackout of fresh official economic data. According to CME’s FedWatch Tool, there is a roughly 50-50 toss-up whether the central bank will opt to cut rates once again next month, after having slashed borrowing costs in October and September. Gold, a non-yielding asset, tends to do better in a low-rate environment.

Minutes from the Fed’s October policy gathering are due to be released later today. At the gathering, officials defended their 25-basis point rate cut as a way to support easing employment growth, although Fed Chair Jerome Powell flagged that another reduction in December was not a foregone conclusion.

"I see a 60 percent chance of modest easing or a friendly hold, given that inflation is slightly above target and growth is slowing. If that happens, gold could rise three to five percent or more as investors respond to the positive environment," Baecker said.

If the Fed keeps rates steady or signals caution, gold may consolidate near current levels, Baecker added, although he noted that "strong underlying fundamentals should limit any significant downside."

Meanwhile, the dollar steadied after recent gains, spurring some strength in metal markets. Baecker said he expects a "moderate" weakening of the greenback and an ongoing move by some countries to diversify away from the dollar for trade and reserves to bolster gold in the months ahead.

Gold was also aided by traders seeking shelter amid a broad sell-down in global stock markets, with investors fretting over bloated technology valuations and the sustainability of debt-fueled spending on artificial intelligence infrastructure.

Upcoming earnings from AI-darling Nvidia (NASDAQ:NVDA) are set to offer more cues on this trade.

Spot gold climbed 0.6% to $4,091.02 an ounce, while gold futures for December edged up by 0.6% to $4,090.79/oz by 04:23 ET (09:23 GMT). A sharp spike in the yellow has pushed it to new record highs this year, although the rally has shown signs of cooling in recent weeks.

Baecker flagged that gold could face pressure "only if inflation suddenly drops, debt markets calm, or central banks tighten sharply, all of which appear unlikely right now."

Heading into 2026, Baecker said he would be keeping close tabs on central bank gold purchases, the trajectory of U.S. rate policy, and "the broader uncertainty environment."

"Geopolitical tensions, inflation trends, and ETF or retail flows will indicate whether gold momentum can continue. These elements together will shape gold’s trajectory next year," Baecker said.

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