Cam Hui

Tue, Jun 3, 2025, 12:02 PM7 min read

I am reiterating my bullish view on gold. Gold staged an upside breakout through a cup-and-handle pattern at $2,100 in early 2024 and hasn’t looked back. Moreover, it has staged upside relative breakouts against both the S&P 500 SPX and a 60%-stock/40%-bond portfolio, and it has stayed above the relative breakout levels even after its recent pullback.

The technical pattern of multi-year bases and subsequent absolute and relative breakouts is highly reminiscent of the pattern experienced by gold at the start of the century, which took the yellow metal from its breakout at $500 in 2004 to significantly higher prices.

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For a longer-term perspective of the upside potential in gold, a point-and-figure chart of monthly gold prices, using a 5% box size and 3-box reversal, shows a measured objective of almost $7,000.

I interpret this as an indication that gold’s bull-run has several years to go before it reaches a final top. It’s hard to estimate a precise time frame for the $7,000 upside potential for gold, as point-and-figure charts don’t have time as a component. The best guess is three-to-five years.

The “sell America” investing trend has given gold GC00 a significant secular tailwind. U.S. President Donald Trump’s pivot to an isolationist policy for America has shaken confidence in the status of American geopolitical leadership and the status of the U.S. dollar DXY.

The long-term costs of these policies are the probable stall in U.S. productivity, and an increase in the cost of capital to U.S. companies through the removal of the USD’s “exorbitant privilege” as a reserve currency.

Credit agency Moody’s recent downgrade of U.S. debt to Aa1 from triple-A underlines a number of stress points that are rattling the bond and currency markets, as well as the loss of the dollar’s “exorbitant privilege”.

Read: These 3 stock-market sectors can defy the growing ‘sell America’ trade

Trump and the Republican-controlled Congress have been operating under the age-old assumption that deficits don’t matter. I would say that deficits don’t matter — until they do.