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Looking at Gold Market Expectations for 2020
Finally, 2020 is here. 2019 was a tumultuous year to say the least and it doesn’t look like we are getting in the new year the right way – as far as geopolitical instability and the global economy are concerned. For gold, however 2019 was a good year and if we continue along the path of political conflict, debt and trade wars more people will be turning to the yellow metal. Gold rose from $1279 to $1520. That’s a gain of 18%. Those who had gold to sell probably got a good price for it. Many goldbugs held on to their gold because analysts have been predicting that the price of gold could go past $2000, even hit $5000 mark.
For a while, gold hovered around $1,400, but it finally broke through the $1,500 mark at the end of the year, confirming the increase in gold bullion sales for the month of December.
Gold managed to jump again above $1,500 at the very end of December, which confirms that the Christmas season is usually positive for gold prices. The first quarter of 2020 looks to be promising with January already showing a spike in the price of gold. What else is in store for gold in 2020?
Fundamental Outlook for 2020
A few days ago, analysts would have said that 2020 may fundamentally not be the best year for gold. This is because the U.S central bank's dovish stance that we saw last year will pass. Fears of an impending recession have abated. It didn’t look like the trade war between the U.S and China would escalate and uncertainty bobber Brexit have also diminished. Just when things looked rosy, the U.S government finally decided to impeach Donald Trump and just a few days after that announcement the U.S launched a drone attack in Iran, killing an important and highly decorated general in the country. So far, Iran is angry at this and has vowed to punish the U.S for its impudence. This has raised fears of a possible retaliation by Iran. The U.S has taken a lot of things for granted and stirred a geopolitical tension which should have eased risky transactions. Right now, the dollar is stronger than and the interest rates have gone but if if the risk aversion gets lower, things can be bad for gold.
The US Fed is expected to cut interest rates during the first quarter of 2020. The growth of the nation’s GDP was expected to recede and inflation expected to go up. While this happens in the US, other countries with growing GDPs would weaken the dollar. Slow economic growth, high inflation and a weak dollar would be a positive combination for gold. The dovish expectation that economists had at the end of 2019 may has deteriorated. Fundamentally, gold would have struggled down the line but the sudden turn of events over the first week of 2020 has left many people who held the view that gold may plateau down the road uncertain of what the future of gold will be. One thing that everyone agrees on is that the gold will continue to rise. The reasons for this rise right now are the geopolitical tensions and weakening dollar.
Investors need to brace themselves. With the Chinese economy declining, central banks buying gold, geopolitical problems escalating and fears over Iran's retaliation, the outcome of the upcoming US elections more investors and central banks will be turning to gold because it has always been a safe haven during uncertain times.
But don’t worry you can always buy gold here from bullion dealers such as Melbourne Gold Company.
Suite 701, Level 7/
227 Collins St, Melbourne
(03) 8678 2085
https://www.melbournegoldcompany.com.au/
by vofos on 2020-01-12 07:25:23
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