Gold poised to resume bull market run in 2019-2020

Precious metal gold, which has been mostly ignored by investors this year, is in the midst of a solid recovery in December, and projected to be getting its safe-haven moment again soon.

Gold prices were solidly higher this week, hitting a five-week high on Thursday at $1,267 per ounce.

According to the economic research consultancy Capital Economics, the end-2019 target for the yellow metal is $1,300 an ounce, followed by the $1,400 level at the end of 2020.

“The past quarter marks a turnaround for the gold price and a sign of what is to come. Accordingly, we continue to expect gold to move higher next year – albeit by a modest $50 per ounce given the recent rally,” economists at Capital Economics wrote in a report seen by Kitco News.

They explained that the optimistic outlook was based on investor interest returning to the gold space as the end of the Federal Reserve’s tightening cycle approached.

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“We are forecasting an end to Fed tightening by the middle of next year. In fact, the dramatic fall in market expectations of Fed tightening over the past six weeks has been a key factor in the recovery in gold prices,” the report said.

It suggested that in 2020 the Fed will start cutting rates more than the markets are pricing in at the moment, which should boost prices at the end of next year.

The economists pointed to weaker US dollar as another major driver for gold in 2019. It has held back and pressured down gold prices for most of this year, they explained.

Demand for safe-haven assets should do well next year, Capital Economics added, noting that ETF holdings are expected to rise back above 80 million ounces.

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“We think that prices will continue to rise after 2019, underpinned by the deepening downturn in the US economy in 2020 and looser US monetary policy. Our forecast is for gold prices to reach $1,400 per ounce by end-2020,” the economists said.

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