CEO of gold producing company Agnico Eagle Sean Boyd has said the current gold price stagnation is due to investors’ reaction to inflation.
Speaking to Kitco News, Boyd indicated that investors are waiting to see how inflation will play out, considering it’s not transitory. His sentiments come as gold continues to struggle, attempting to sustain its price above $1,800.
“Gold is stuck right now because investors are still trying to determine what inflation is going to look like. We are in that camp where ‘inflation is not transitory.’ We can see prices starting to go up. We see more permanent inflation down the road. That is a recipe for higher gold prices,” said Boyd.
According to Boyd, inflation rates are likely to stay permanent in the coming months, which will act as a recipe for gold to hit new record prices.
He suggested that if gold stabilizes around the $1,800 price mark, it will generate significant cash flow driving the price higher. However, he urged investors to take the opportunity and position themselves for higher gains when the prices soar.
‘Gold to soar in six months’
His sentiments partly align with the view of Mike Larson, a senior analyst at rating agency Weiss Ratings. As we previously reported, Larson recommended investing in precious metals, stating that gold and silver will surge within the next sixth month.
He also recommends investing in both paper and gold exchange-traded funds (ETFs). Notably, since recording a high of above $2,000 in August last year, gold prices have struggled to recover.
According to Larson, investors have held back from investing in the precious metals over the fear that the Fed will remove policies like lower interest rates.
Similarly, he also believes that rising inflation rates have accelerated investors’ fear of confusion over the next Fed move to contain the situation.
This comes as the Federal Reserve plans to roll back its enormous pandemic mitigation measures amid increasing uncertainty over persistent inflationary pressures.
Related video: Why gold is ‘stuck’