How central banks and ETF inflows drive the gold price

The recent rise in gold prices (GC=F) could signal a potential recession, a macro strategist told Yahoo Finance ahead of expected Federal Reserve rate cuts in September. Chris Mancini, deputy portfolio manager of the Gabelli Gold Fund, talks to Catalysts about the precious metal's recent rise.

Mancini notes that interest in gold is increasing as Wall Street expects interest rates to fall soon. He notes, “We are experiencing a slowdown in the economy.” He emphasizes that gold-backed ETFs are also gaining importance in light of this economic weakness. The Gabelli Gold Fund manages several classes of its gold ETFs (GLDIX, GLDCX, GOLDX, GLDAX).

“There has been consistently solid underlying demand from central banks,” particularly in China, says Manchini. However, the recent rise in gold prices has largely been due to ETF purchases as interest rates have fallen.

When asked about the impact of the expected Federal Reserve rate cuts on the price of gold, Mancini replied: “If interest rates continue to fall after what is expected to be September next year, I think we will continue to see inflows into ETFs and that will drive up the price of gold.”

Click here to watch the full episode of Catalysts for more expert insights and information on current market events.

This article was written by Angel Smith