Are gold prices heading for another breakout past $2,000/oz?

Are gold prices heading for another breakout past $2,000/oz?

Gold has been around its the current level (in dollar terms) four times since 1971 on an inflation-adjusted basis. Most recently, two years ago, the nominal price was nearly $2,100an ounce and we are a little below $2,000 now. It looks to me like there will likely be a breakout in the gold price that will gather momentum. Why? Because the price of gold moves in the opposite direction to real interest rates, or the rate of interest a bond pays after the effects of inflation. Real interest rates are negative right because inflation is high and interest rates are low. People are interested in gold because they are worried about future purchasing power. The market is still considering whether the US Federal Reserve (Fed) will be able to raise interest rates as much as seven times this year and whether or not inflation will materially weaken. In my view, this is why gold hasn’t broken out properly yet — the market is focused on relatively hawkish observations. The trigger for gold may be when inflation surprises to the upside, or the market accepts that seven interest rate hikes in the US is a bit too aggressive. This would lead