Gold to US$4000 This Year – Gundlach

Gold has just blasted off to a new record once again as a wave of violence breaks out in the Middle East. You’ll never guess who is losing the most money from Houthi strikes. The attacks, combined with an expected lack of rate cuts to rescue the falling stock market, have seen gold rise further. Jeff Gundlach, CIO of DoubleLine, has stated in a recent interview that he sees gold reaching US$4000 per OZ this year. He also sees a 60% chance of a U.S. recession.

Israel Breaks Two-month Ceasefire

Israel has started launching deadly airstrikes on Gaza. This breaks its ceasefire agreement with Hamas and according to The Guardian, this was the deadliest 24 hours in Gaza since 2023. Benjamin Netanyahu has been quoted as saying that the strikes are “just the beginning”. After Hamas refused to release hostages, Israel’s defence minister said that the gates of hell will open in Gaza and Hamas will be hit with force they’ve never seen before.

Houthis Add Fuel to the Fire

The Houthis have been disrupting shipping through the Red Sea by attacking a variety of vessels. One of the rumoured vessels was the U.S. aircraft carrier USS Harry S. Truman. This is meant to be a retaliation against the U.S. for being an ally of Israel, which is attacking Hamas, who are an ally to the Houthis. Ironically, China has arguably been hurt the most – economically speaking. The shipping disruptions have caused China an estimated loss of US$10 billion up until now. This far exceeds every other country, and the U.S. comes nowhere close to these losses. Trying to close a waterway that moves 12% of global trade is, of course, one of the factors helping gold’s continued climb.

The Fed

The Fed’s two-day policy meeting is underway and will have its potential greatest impact during and after Powell’s statements to the media. CME Fedwatch has the odds of a rate hold at 99% - quite high. This is not what the stock market wants to hear. The SP500, after a small recovery bounce, has continued to go red.

Increased war, falling stocks and the Fed refusing to come to the rescue are great reasons for Jeff Gundlach seeing the gold price hitting US$4000 per ounce this year. Gold has clearly been moving opposite stocks, performing in its classical fashion as a safe haven. The only thing that may boost it more aggressively might be when the Fed finally gives in and massively increases the money supply, which will revalue gold by default.