Gold has always been known as an inflation hedge. It has also been known as a good investment when the real rate of interest is negative. Now we are seeing inflation lower with current levels at approximately 2.5% and real rates are positive even if the Fed starts to lower nominal rates. Under this world, we are seeing gold reach new highs of $2500 per ounce. This is not what one would expect.
A higher gold price only makes sense if the market believes that inflation is not tamed, the dollar will move lower, and there will be significant financial risk. The gold market is an expectational market and the view from gold buyers is that the future will not be as good as what we currently see.
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