Gold prices: 'We could see $2,800' this year, analyst says

Path Trading Partners Co-Founder and Chief Market Strategist Bob Iaccino joins Yahoo Finance Live to discuss the rise of gold prices, the catalyst, and how inflation plays a part.

Video transcript

SEANA SMITH: You're looking at gold off a little bit today, pulling back from a 13-month high on weaker economic data. Still, though, obviously, above 2,000. Gold since the start of the year up just about 10%, hovering above that critical $2,000 level here, and just trading just about 50 bucks below its record high. We want to bring in Bob Iaccino. He's Path Trading Partners co-founder and chief market strategist. Bob, it's good to see you here. So we're holding above that 2,000 level. I think a lot of investors are asking if there's really upside here to the price of gold. What do you think?

BOB IACCINO: I think there is. Gold was my big call for the year. I'm sticking with that as of this point. I still think we're going into recession, although the timeline may be pushed a little bit. The yield curve says we're already there. Economic data is going to start to slow. And if you're long gold, which I am, the best case scenario is the Fed cuts rates to get you into-- or I'm sorry, out of a recession, which is positive for gold.

Worst case scenario, the Fed continues to raise rates. I think this is the least likely. And they hold-- or they hold the pause a little bit longer. Two out of three of these cases is good for gold. The worst case scenario is that they hold the pause, and we actually get this soft landing or easy landing or even no landing. That wouldn't be great for gold, and I think that's the least likely scenario.

DAVE BRIGGS: Fed certainly plays a role. Bob, talk about some of the other factors driving the prices where they are today.

BOB IACCINO: Well, again, you have this issue of asset prices being sold off. And gold has always taken advantage of that. And what's generally happened is, the Fed-- again, bringing that out-- cuts rates to help the economy and help asset prices. That's been a driver of gold in the past. And a lot of people believed that. CME Fed watch tool has cuts starting in July of this year, which the Fed says they're not going to do.

Another one is people think of gold as an inflation hedge. And it's really not. What gold is, is it's an asset. And if you look at assets in general, when inflation starts and then continues to rise through, gold powers through that because it's an asset, just like house prices, just like stocks. We forget the good part about inflation is asset inflation, and gold is an asset. The problem comes in for gold investors when the Fed starts to aggressively fight inflation.

So something we haven't had, which has contributed to gold's underperformance over the last decade or so, was we haven't had inflation, so we haven't had a Fed to fight inflation. And that's kind of gave gold this weakness. When inflation started, gold rallied. We saw that March spike that references almost the all-time high that Seana mentioned. We're driving toward that again. And if we are in a situation where, as Neil Dutta from Renaissance or at Macro put it, inflation remains unaddressed, then gold's going to benefit from that.

SEANA SMITH: Bob, how much upside is there to gold? Are we talking 2,500? Are we talking above that?

BOB IACCINO: Well, here's where people think I'm nuts. I think we can easily break to new highs. And I think if it goes the way I think it's going to go, easily within the next 12 months, we could see 2,800. I used to say by the end of the year. I'm not saying that anymore because I think the Fed was much more aggressive than I thought they would be when I made that call.

But I think the issue here is the popular opinion and the politically popular opinion is that the Fed should stop trying to fight inflation. And I don't think people realize how bad that is for the whole country, as opposed to just 2 or 3 million people. And I don't mean to downplay that. I want to stress that.

But the 2 or 3 million people that may lose their jobs in a recession, a recession, as investors should look at it, is good for gold. I'm sorry, it's good for stocks. It's not necessarily good for gold. Where gold outperforms is when there's inflation and a recession. And I think that's what we're going to because I think the Fed is going to cave in to pressure and stop fighting inflation.

DAVE BRIGGS: 2,800 call-- gutsy. All right, Bob, with that, we want to play a little game. We want to see how deep your love for gold goes. We're calling this Bob's Buys. We'll give you a choice between two investments. You'll tell us which is the buy and why. First up, Bitcoin, which has been surging with gold, which seems a little odd on its face. So Bitcoin or gold?

BOB IACCINO: So I have to ask you a question first, and we actually did this with a recent guest on our podcast. Is this 100% in one or the other?

DAVE BRIGGS: Is it 100%? I'm not sure.

SEANA SMITH: You mean all in on gold or all in on Bitcoin?

BOB IACCINO: Yeah, can I go 70/30, or I can't do that?

DAVE BRIGGS: Oh, I see what you're saying.

SEANA SMITH: Yeah, sure, you can make your own twist to the game. We're open to suggestions, Bob.

DAVE BRIGGS: Well, look at you making up your own rules. I was going to say 100%, but go, go.

BOB IACCINO: Well, actually, if you make me pick 100, it's gold. I am actually in about 70% gold, 30% Bitcoin for that amount of the capital that we allocate to this sort of space because I think the issue with Bitcoin is, is it here in 10 years or not? I think it is, but I don't run that sort of part of the game, so.

SEANA SMITH: All right, Bob, well, we're setting you up here because we have a couple to get through. So the next one's up is treasuries, TIPS, or gold? What do you think?

BOB IACCINO: Gold.

SEANA SMITH: You're sticking with it. Didn't even have to think twice about it.

DAVE BRIGGS: I want to get back to the prior answer. What do you make of the dynamic, though? Gold rising typically tells us people are risk averse. How does that rise with arguably the most speculative asset on the planet in Bitcoin? How do those rise together?

BOB IACCINO: So Bitcoin has a couple of things going for it. It's, again, beginning to perform in a non-correlated way, which I like. It hadn't done that. It was correlated very sharply to the NASDAQ. That's not the case anymore, at least in the short-term. If that sticks with it, then a non-correlated asset is always good in any environment. So that's really the core of it.

SEANA SMITH: All right, Bob, and last up here, I bonds or gold? What do you think?

BOB IACCINO: Wow, that one's tough. I'm going to have to say gold, too. But I think if you put me in a position, I'd go 60% gold, 40% I bonds.

SEANA SMITH: All right, there we go. All right, gold the winner of all three. You're the gold guy, so maybe we shouldn't be surprised by that. Bob, great to see you. Thanks so much.

BOB IACCINO: Good to see you guys.