The gold market continues to consolidate near the record high of $2750 per ounce. Although gold prices have risen 33% so far this year, an analyst said that this is still the calm before the storm, and now it is time for investors to increase their holdings of commodities, especially gold.

Robert Minter, the head of ETF strategy at abrdn, recently suggested that investors should ignore potential short-term market volatility and focus on the bigger picture: interest rates are falling.

At the same time, the decline in interest rates and stubborn inflationary pressures mean that the rate of decline in real interest rates may be faster than some people expect. Minter added that in this environment, investors should increase their holdings of commodities and specifically allocate to gold.

Minter pointed out that traditionally, this environment has been favorable for gold, but many investors still choose to wait and see. He pointed out that average investor interest is one of the biggest bullish factors he believes supports long-term gold prices.

Minter emphasized that institutional and retail investors have been liquidity providers for most of 2023 and this year, as they have sold gold ETFs. He explained that the market is able to absorb excess liquidity because central banks around the world have been engaged in unprecedented buying frenzy.

Despite the slowdown in central bank demand, Minter stated that investor demand has begun to shift, and gold ETFs have seen capital inflows this year.

He said, 'The traditional liquidity providers, ETF gold sellers, this dynamic has disappeared, and these investors have actually become liquidity receivers.'. This new market trend will undergo a transformation. The structural benefits of declining interest rates and such low market positions are very rare, which only proves how much potential there is still

Minter added that it is not surprising that investors are starting to pay attention to gold, as they are trying to protect their purchasing power from the impact of rising inflation, which is partly caused by reckless government spending.

After the long campaign season, Americans will go to the polls next week to elect a new president. Minter stated that despite their strong rhetoric, it is clear that former President Trump and current Vice President Harris both believe that the US dollar is as valuable as the "Monopoly Coin".

He said, "Regardless of who wins, both candidates have ignored the basic laws of the economy. Both are irresponsible financially

Minter said that in the context of global debt, he expects a comprehensive victory for the Democratic Party to be most beneficial for gold, as a comprehensive victory for Congress and the White House could lead to a new round of government spending.

Although debt and rising consumer prices will continue to support gold prices in the last two months of this year and even in 2025, Minter points out that gold is not just an inflation hedge tool.

Minter said another reason he is bullish on gold is that the new US president is unlikely to ease global tensions.

Looking towards the end of the year, Minter stated that he expects gold prices to trade at around $2800 per ounce, slightly higher than the current price. He added that the gold market may easily reach $3000 per ounce by 2025.

He said, "If the interest rate cut reflected by the bond market comes true, a 200 basis point cut by next year, then it is not unrealistic for gold prices to reach $3000 per ounce

Daily chart of spot gold