Joe Cavatoni of the World Gold Council says gold is holding up well despite a high-volatility, geopolitics-driven backdrop. He argues that inflationary pressure, delayed Fed easing, and ongoing central-bank buying support the longer-term gold case even if near-term rate policy and oil remain headwinds.
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In this Investing News interview, Charlotte Mloud speaks with Joe Cavatoni, senior market strategist, Americas at the World Gold Council, about gold’s performance, the WGC demand trends report, and the impact of geopolitics and central-bank behavior. Cavatoni says gold’s recent strength makes sense given the combination of aggressive geopolitical rhetoric, the Iran conflict, and the market’s pricing of a potentially prolonged Middle East disruption. He emphasizes that gold is acting not just as a crisis asset, but as something the market is pricing for persistent inflationary conditions, especially if oil remains elevated. On inflation, he says the key issue is not inflation itself but how monetary policy responds. …
Near term, gold looks tactically supported but vulnerable to sharp swings: the main risk is that higher real rates and a calmer geopolitical backdrop cap upside, while any oil-driven escalation could trigger another leg higher.
Over the next few months, the base case is a high, volatile gold range that improves if inflation cools and Fed-cut expectations firm up. Continued Asian demand and central-bank accumulation would confirm the bullish setup; a sustained rise in recycling or a stronger dollar/rates shock would weaken it.
Structurally, the interview argues for a regime where gold remains a core reserve-diversification and geopolitical hedge asset. If central banks keep treating gold as a liquid reserve instrument, that supports a durable bull case independent of short-term price noise.
Gold’s recent price action has been unusual but broadly consistent with the geopolitical and policy conditions facing the market.
He says the first quarter and April price action was not what is normally expected, but was not unexpected given the conditions.
Persistent Middle East conflict could sustain inflation through higher oil prices, and gold is already pricing that in.
He links oil, inflation, and market pricing to a prolonged conflict scenario.
Inflation itself is not the key variable; the important issue is how monetary policy responds to it.
He explicitly says inflation alone is not what to watch, but central bank response and real rates are.
Has the price activity we've seen over the last couple of months made sense to you? How are you seeing it?
Joe says the Q1 and early April price action was probably what we haven't normally expected but not unexpected given the conditions. He traces it back to aggressive rhetoric from the White House pre-conflict, and notes gold is now trading around $4,500-$4,600, up 6% for the year, pricing in potential consequences of a prolonged Middle East conflict including persistent inflation. He sees a good signal that the longer-term trajectory for gold makes sense over the next 24-36 months.
Can you talk about how gold tends to perform under inflationary circumstances? How does it actually usually play out?
Joe explains that the initial implications of inflation are headwinds for gold because central banks respond by holding or raising rates, making bonds more appealing. However, over time as inflation gets managed, gold holds its value. He notes gold has shown solid performance even with these conditions developing.
What did central bank demand actually end up looking like for the first quarter?
Joe reports a net positive gain of 244 tons for Q1 despite headlines about central banks selling. He explains some central banks (Turkey, Ghana, Tanzania, Russia, Sofaz) were using gold as a liquid instrument taking profits to get cash in a conflict environment. But net net, purchases from Poland, China, and others kept it in net positive territory, putting it back in line with the near-thousand-tons-per-year trend.
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