Gold is looking to outperform silver into year-end, according to Bloomberg Intelligence, which is not ruling out US$4,000 gold by 2023, noting that the gold bull rally is just beginning.

After breaking $2,000 an ounce level, gold has been stuck in a trading range between $1,930 and $1,980 an ounce. But despite the several-week hiatus from major price action, gold will still do better than silver in the second half of the year, said Bloomberg Intelligence senior commodity strategist Mike McGlone.

“The done-deal nature of continued central bank easing is a solid foundation for gold, but less so for silver and copper prices. Industrial metals are dependent on more fiscal stimulus and a global economic rebound, yet increasingly vulnerable to normal stock-market mean reversion,” wrote McGlone in the latest monthly commodity update.

For silver to outperform gold on a continuous basis for the rest of the year, the market will have to see a combination of rising bond yields, a peak dollar, declining stock-market volatility and continued global economic expansion. In Bloomberg Intelligence’s view, this scenario is unlikely.

“Gold should continue appreciating into year-end, notably vs. silver, copper and base metals, which are more at risk to a wobbly stock market and slack global economic growth, in our view,” McGlone said. “If stock prices decline, gold’s upper hand should accelerate as base metals come under pressure.”

Moreover, the gold’s bull rally is just beginning, noted the report. “Gold bottomed at about $700 in 2008 and peaked near $1,900 in 2011. A similar-velocity 2.7x advance from this year’s low-close near $1,470 points toward $4,000 by 2023,” McGlone explained.

The stock market will play a big role in gold’s performance going forward, with fortunes turning towards the yellow metal.

“If history is a guide, equities will eventually experience a bear market. Stocks’ rapid ascent the past few years has left gold by the wayside. Prospects appear to be increasing for an extended period of trading places for the asset classes,” McGlone noted.

Despite this optimistic view on gold, the report warned that $2,000 an ounce will prove to be a strong resistance level because the yellow metal looked overheated above that level. However, even though it might take gold some time to breach $2,000 an ounce on a sustained basis, in the long-term gold is heading much higher.

“The stair-step rally in gold is set for some leveling off, in our view. This is expected in a bull market, especially in early resumption days, but our graphic shows the propensity for gold to pull back and consolidate gains when reaching similar relatively extended levels in the past,” McGlone said. “It looks to us like gold’s bullish run is just beginning.”

Some of the main drivers supporting gold into the year-end include central bank easing, uncertainty surrounding a V-shaped economic recovery, fiscal stimulus and stock-market volatility.

“Gold has the catalysts to maintain performance leadership into year-end, in our view,” McGlone wrote. “Central-bank rate easing and U.S. bond yields gravitating toward zero are solid underpinnings for gold, as is the potential for increased U.S. stock-market volatility approaching the presidential election. Less certain is global fiscal stimulus and an economic recovery, typically needed to buoy industrial metals.”