Why gold weakness might be an opportunity for investors

Gold dropping almost 3% today, its worst day since February of 2023 / a year. The safe haven trade losing steam as worries ease over the conflict between Israel and Iran. The precious metal now negative over the past two weeks. Nikki Shields thinks the weakness is temporary. However, she’s the head of metal strategy at MKS. Pam Nikki, thanks so much for joining us here today. So this big drop today, you think it’s just temporary? Look, I think you could have put things in perspective, right? And since the October 7th Hamas attack, we’ve been up in a straight line, $600.00. So yes, it’s been a pretty, you know, deep one day retraction. Now, do you think geopolitics did sort of kick things off into faulty territory? But this is so much more than geopolitics. What’s happening in the gold move? It’s happened against the backdrop where we’ve gone from 7 Fed cuts to three to two. We’ve had a very strong dollar and you’ve you’ve had, you know, geopolitics shifts simmering, but real interest rates are sitting at plus 2%. So this is a regime shift that I think gold is internalizing over the last few months. And geopolitics is just that sort of takes it into sort of over frothy territory. So what’s the next catalyst then if you’ve got so many potentially at play? I mean, I, I do think we go higher, but ultimately, you know, 2500, but it’s not going to be a straight line like it was the past six months. I do think a healthy correction is in play because I think you’re going to get a lot more people involved who have missed this move. A lot of people ETFs are not, have never have not really subscribed. We talk about strong physical demand, but it’s not firing on all four out of five cylinders. So I, I do think some sort of correction 2322 hundred and it just will re rate to a less bullish trajectory going forward. It’s interesting we talked about this is a safety trade. I think it’s more than that as well. And it’s great. You’re the best person have on today. But as we’ve talked about 2022 central banks bought almost $70 billion worth of gold record at the time. They did pretty much the same last year. They’re probably on pace this year to do similar. So this is a central bank story probably more than anything else. Thoughts on that? Absolutely. And I think it’s, this is what makes this time different. And you, you, you’re so wary of saying that in anything in financial markets, like why is this time different? But this time is different versus all the other big gold rallies because you’ve been you’ve had physical and central bank buying that is coming in and, and they’re increasingly less price sensitive like they’ve been in the 2011 gold spike in 2020. And so it does have a lot more legs and sort of a higher core foundation. What is your base case for what the Fed is going to do? And then how does that track with gold? You sort of mentioned it at the top. My base case is, you know, it was 3 cuts. It’s probably going to dial down to two for sure. But at the end of the day, does it really matter when gold still rallied and we went down from 7 cuts to two cuts, right? So they’re going to cut this year. I think they’ll be constrained to cut two reasons. One, elections. And secondly, it’s, it’s interest rate control like it’s, so it’s they’ll, they’ll cut And you know, I think gold would just price in a less bullish trajectory if, if they’re not cutting as as much as we expected. What about silver, very bullish silver? Because I think if you play on that sort of US exceptionalism theme, Green revolution, it’s, it’s taking a little bit from your sort of Bitcoin crowd who kind of sort of full up on, on, on, on that. I think it it’s both a gold proxy and a reflation proxy and a let’s talk about the green revolution and I think it fits into all of that. So very undervalued versus gold.