Gold’s volatile run set to continue as investors eye next breakout

Gold’s volatile run is far from over, with the precious metal increasingly reasserting itself as an alternative form of “risk-free” money alongside the US dollar amid persistent inflation and geopolitical uncertainty, according to Jupiter Asset Management.

With physical bullion in short supply, the firm sees mining companies as a more efficient way to gain exposure, offering potentially higher returns from smaller allocations thanks to strong profits and free cash flow.

The outlook follows a turbulent end to January, when gold suffered its steepest slide in four decades and silver recorded a record intraday plunge after both metals had surged to successive highs since the fourth quarter of last year.

The sell-off was triggered in part by the nomination of Kevin Warsh as US Federal Reserve chair, signalling a more hawkish policy outlook.

Ned Naylor-Leyland, Jupiter’s head of gold and silver, described the downturn as “a washout” rather than “a bloodbath”, arguing that the correction flushed out highly leveraged speculative positions and ultimately left the market in a healthier state for long-term investors.

Despite the volatility, he said gold remained in a structural tailwind and was likely to push to new highs while continuing to experience sharp swings along the way.