(Kitco News) – Gold prices might take a look at $1,700 an oz earlier than the top of the yr because of the mixture of central-bank financial coverage and political and financial uncertainties, Refinitiv GFMS mentioned.
The consultancy issued the outlook whereas releasing its annual Gold Survey report early Thursday in London. In 2019, gold posted its highest annual common in six years.
And the rally doubtless isn’t over, mentioned Cameron Alexander, supervisor of precious-metals analysis with Refinitiv. The macroeconomic backdrop ought to stay supportive for gold, with political and financial uncertainties prone to result in stock-market volatility and better threat aversion, Alexander mentioned.
“Central banks’ financial coverage is prone to stay on the unfastened aspect, with a risk of not less than one interest-rate reduce from the U.S. Fed later within the yr, significantly ought to the U.S. financial system present renewed indicators of stagnation,” mentioned Alexander. “Whereas demand from key Asian markets will doubtless stay weak this yr, ongoing central-bank purchases and renewed investor curiosity will lend help for larger gold costs.
“We due to this fact count on gold to common $1,558/ouncesin 2020, with a risk to check and transfer past $1,700/oz later within the yr.”
Throughout 2019, gold averaged $1,392 an oz, a year-on-year acquire of 10% and the best annual common since 2013, Refinitiv mentioned. The typical for the second half of 2019 was $1,477 an oz, which was up 13% from the primary half and 21% larger year-on-year.
“The spike within the value was largely attributed to a pick-up in investor curiosity, significantly among the many skilled investor neighborhood, which was evidenced by positioning on Comex and a surge in inflows into gold ETPs [exchange-traded products],” Alexander mentioned.
“Renewed curiosity was pushed by an escalation of geopolitical tensions, elevated issues over the worldwide financial and commerce prospects in addition to the gold’s improved value outlook. Moreover, gold’s enchantment was boosted by a shift among the many world’s key central banks in the direction of a extra accommodative financial coverage to help slowing progress and weak inflation.”
Web managed-money positions jumped by 15%, or 104 metric tons, within the second half of 2019, Refinitiv mentioned. Whereas backing off from the height, the 819 tons as of year-end was nonetheless a rise of 362% from the end-of-2018 stage. In the meantime, ETP traders added 387 tonnes of gold throughout 2019, with world holdings reaching a brand new historic excessive of over 2,700 tonnes by year-end, Refinitiv mentioned.
Nonetheless, bar and coin retail funding fell by 17% within the second half of 2019, Refinitiv mentioned. Bar demand in India fell by 53%, harm by larger import duties and excessive costs within the native foreign money. China, in the meantime, posted a 2% rise in bar funding throughout the second half, pushed by a pullback within the home fairness market and rising commerce tensions with the United States. World coin fabrication fell by an estimated 17% to 135 tonnes within the latter a part of 2019, the metals-research agency reported.
Gold consumption by the jewellery sector additionally declined, with fabrication demand falling by 17% within the second half of the yr, the consultancy reported. This demand fell in China by 10% amid a slowing financial system and better gold costs. India’s jewellery demand fell by 36% within the second half of the yr.
On the availability aspect, Refinitiv mentioned environmental issues and a crackdown on unlawful mining led to a fall in gold output throughout in 2019.
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