(Kitco News) - Gold should face headwinds in the near-term future, but a few years out, over-tightening by the Fed could send the economy into a recession and push gold prices up substantially, this according to Erik Norland, Executive Director and Senior Economist of CME Group.
"We have a vast expansion in deficits in the United States, and if the Fed over-tightens and were to put the economy into a recession and then have to cut rates back, we could see a tremendous, tremendous bull rally in gold," Norland told Kitco News.
Norland noted that this scenario may not materialize for a while.
"At the moment, that's not in the cards for the next few months," Norland said.
Gold has a very strong negative correlation with the dollar, and investors should be trading gold like a currency, he said.
"I think that you really have to look at gold here as a currency that's trending with the euro, the pound, the renminbi, and other currencies versus the U.S. dollar," Norland said.
This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.