ETF expert on gold: 'you take your round number and go for it'

ETF.com Managing Editor Cinthia Murphy, joins Yahoo Finance's Kristin Myers to discuss the recent rally in gold, as prices for the precious metal hit a new record amid the coronavirus pandemic.

Video Transcript

KRISTIN MYERS: Welcome back to live market coverage here on Yahoo Finance. All three major indices remain in the green. But now, I want to talk about gold. We're going to be chatting about that, because it's time now for our "ETF Report," brought to you by Invesco. And joining us is Cinthia Murphy, managing editor of ETF.com.

Cinthia, we were talking about gold the last time you were here. We wanted to talk about it again because the last time it was under that $2,000 level-- I believe it was around $1,900. We've now surpassed that. How high is gold going to be rising, do you think?

CINTHIA MURPHY: Hi, Kristin. It's amazing-- it feels like that's all we talk anymore is about gold. It continues on a tear, and a lot of it has to do with just the technical momentum. Everybody kept trying that $2,000 mark. It hit that. It passed it. So from a technical perspective alone, momentum is behind it. It has, you know, the wind on its wings. And it keeps rising.

So I was just reading this morning some market analyst commentary-- where is gold going from here? Because it's already at a record high. It keeps going. Demand is huge. These gold ETFs keep picking up a ton of assets. Everything is at a record in this space. And some people out there are saying we haven't even seen the beginning of it.

If you look at previous gold bull markets, like 2001 to 2008 or other historical levels, you know, when gold rallied, say, 200% within a cycle, we could be looking at gold at $3,000. If we cross $3,000, then technicals could take us to $4,000. So you take your round number and go for it, because the only bear case I've seen so far for gold at this point is if the economy surprises. If we somehow figure out how to get a hold of COVID and everything reopens and everything is great suddenly, then gold is going to stop its run. Otherwise, everything is in favor of gold at higher levels at this point.

KRISTIN MYERS: I'm absolutely staggered to hear you throw out $3,000, $4,000. I was going to ask you-- $2,500, perhaps, could we be hitting that? And you have completely surpassed any kind of estimation that I was going to be throwing out at you. So when I hear you say $3,000, technicals could push us to $4,000, I, of course, start wondering about corrections and volatility.

We had some volatility in gold before. We don't normally think of tons of volatility when we're thinking about a safe haven asset like gold. So I mean, how much volatility do you think could be coming up, as you say gold is now on a tear?

CINTHIA MURPHY: I think at this point, you know, we could expect some corrections. You could expect that a lot of this movement is performance chasing. So if anybody gets cold feet out there and they see somebody else get out of the market then it triggers some kind of correction. But you know, volatility is beneficial for gold. A weaker dollar, which we're seeing the dollar two-year lows with all the printing of money and all the stimulus all around-- economic uncertainty, geopolitical risk, concerns about inflation given all the money we've thrown into the economy.

I mean, all of these factors continue to support gold. So I think it's more likely that we see these moments of correction. But to a lot of people if you're positive in the space, you're just going to see that as a buying opportunity to buy gold at a slight discount. It's also important to remember that, you know, from gold, a lot of the demand is in investment vehicles today, because jewelry demand, which is another leg of the gold market, is weak due to the economic crisis around the globe.

And still, that demand is at record levels. But we haven't really discovered any new gold mines since 2016, I think, is the last time we discovered any new supply. So the supply of gold isn't necessarily elastic. It's limited. And the demand is rising-- so another huge reason to keep seeing this going farther. And any weakness, maybe it's an opportunity to buy more.

KRISTIN MYERS: All right, well, if we hit $3,000, Cinthia, you're going to have to come back on here and tell us how much higher it's going to go. Cinthia Murphy, managing editor of ETF.com.