Shams Afzal, the managing director at Carnegie Investment Counsel, has sounded a note of caution regarding the future of gold prices. He believes that the bull run in gold prices, which has captivated investors worldwide, is nearing its end. Citing a strong labor market and inflationary policies under former President Donald Trump as significant factors, Afzal advises a conservative approach to gold investments at this juncture.
According to Afzal, the robust labor market has been instrumental in bringing the bull run in gold prices to a halt. A vigorous labor market can often lead to increased consumer spending and economic growth, which may, in turn, influence commodity prices, including gold. As employment figures remain strong, the need for safe-haven assets like gold diminishes, thereby impacting its price trajectory.
Moreover, Afzal points out that Trump's inflationary policies are playing a crucial role in preventing Federal Reserve cuts. These policies have led to an environment where interest rates are less likely to be reduced, affecting the allure of gold as a low-yield investment. Afzal suggests that these macroeconomic factors are vital considerations for investors contemplating their gold portfolios.
In his advisory, Afzal recommends maintaining only a partial position in gold, emphasizing the importance of assessing the impact of tariffs on the market before making substantial investments. Tariffs can have far-reaching effects on various sectors and commodities, including gold, and their implications should be carefully evaluated by investors.
The current outlook for gold prices suggests a decline is on the horizon. With the expected end of the bull run in sight, Afzal urges investors to exercise restraint and adopt a conservative stance when considering gold investments. The combination of a strong labor market, inflationary pressures, and tariff impacts necessitates a cautious approach.