What does it mean when gold breaks through its previous high by more than 10%?

International gold prices continue to hit new highs. On April 12th, international gold prices rose again, with COMEX gold surpassing $2400, reaching as high as $2412.8 per ounce; while London spot gold approached $2400, briefly reaching $2395.34 per ounce, both hitting historical highs.

Facing the current strong uptrend, UBS still remains optimistic about the future of gold prices, predicting that gold prices may double from the current levels:

The recent surge in gold prices reminds me of a famous saying: "Nothing happens for decades, and then decades happen in a few weeks." Historical data indicates that gold prices may remain in a slump for a long time, but once they break through, the uptrend tends to be rapid and intense. When investors decide whether to chase the recent rise in gold prices or avoid it, they can look to past market trends for inspiration. Here, I define a "breakthrough" as gold prices exceeding previous historical peaks by 10%.

If history repeats itself, then it is not too late to participate in the gold uptrend. Investors holding for 2-3 years may see gold prices double, rising to over $4000. The signal to take profit is when real interest rates turn negative and a general recession occurs. Looking ahead, as real interest rates are currently high and a recession seems distant, it is still too early to declare the end of the gold price rally. A breakthrough in gold prices can be seen as an ominous signal, and geopolitical risks may follow. For the market, many current prices seem to be misjudged, such as extremely low credit spreads, high stock valuations, and moderate volatility. It can be said that the gold market has issued a warning signal.

Michael Widmer, commodity strategist at Bank of America, also expressed bullish views on gold in the latest report:

Gold and silver are among our favorite commodities, with a combination of macro factors including the end of the rate hike cycle, central banks around the world, Chinese investors, and an increasing number of Western buyers pushing up gold prices. Therefore, we expect gold prices to rise to $3000 per ounce by 2025. Silver will also benefit from this, with prices expected to rise above $30 per ounce in the next 12 months due to strengthening industrial demand.

At the same time, there has been a deviation between the current gold price and the 10-year US real bond yield. In response to this, Bank of America's Chief Investment Officer Michael Hartnett made a pessimistic prediction last week, pointing out in the latest report that investors are focusing on the "present," realizing that the market or economy cannot sustain a nominal interest rate of 5% and a real interest rate of 2%, and are hedging against the two:

1. The risk of the Federal Reserve cutting interest rates as CPI accelerates;

2. What's even more ominous is that the Federal Reserve's Interest Rate Cost Control (ICC), Yield Curve Control (YCC), and Quantitative Easing (QE) are no longer supporting the "endgame" of government spending in the United States.

In short, a major breakthrough is about to happen. If the surge in gold prices leads to a surge in yields, then it's time to start the countdown, waiting for one of the following: Quantitative Easing (QE) and/or Yield Curve Control (YCC).

Because if the bond market smells the "endgame" that gold is currently sniffing out, then Powell will once again bear the heavy responsibility of preventing a catastrophic financial collapse