Gold Price Forecast
Although we'd love to be able to,
2019 Gold Price Forecast:
Photo (L to R): President Trump, President Xi, Prime Minister May, and President Draghi (ECB)
Demand for investment gold rose by 4% in 2018 according to World Gold Council statistics, with the highest central bank buying for 50 years. The slowdown in the global economy is causing a headache for national treasuries, with governments increasingly concerned about currency volatility and trade difficulties. The US/China trade war as an act of American protectionism has had a widespread impact on supply and demand, and the longer it goes on the greater the perceived risk.
The main concerns politically and economically are the US/China dispute, the Eurozone’s growth slowdown, and Brexit. For the EU it is the worst of all scenarios, given that the weakened growth is being further punished by the US/China trade tariffs hurting native economies and the concern of Brexit removing the UK from the single market. Following Theresa May’s spectacular Brexit defeat it seems likely that the UK will continue to be stalemated over Brexit for months to come, and with talks between the US and China breaking down, it might be at least until the spring before any new progress is made.
The International Monetary Fund (IMF) are forecasting that the global economy will only grow by 3.5% this year, with Forbes and Bloomberg amongst the many news outlets reporting the risk of recessions across the world. Italy has recently entered recession, and it is likely that other nations such as Turkey will follow suit soon.
Update: As of March, figures from the European Central Bank and the OECD (Organisation for Economic Co-operation and Development) report that growth in the Euro area will be down to 1% in 2019, while wider global growth will be down to 3.3%. Germany, the UK, and Turkey are the biggest losers.
In response to the concerns of weak growth, the likes of the Bank of England and the US Federal Reserve have already hinted at no new interest rate rises in the near future – with the European Central Bank one of the closely watched sources. Europe’s top bank has only recently finished its quantitative easing program and, while the confidence to withdraw the safety net is a promising sign, it could expose the EU to wider global difficulties.
Update: As of March, the ECB has claimed it will not raise rates for the entirety of 2019.
January has gone well for the stock markets – their best performance in 30 years - but it was only last month that the FTSE 100 registered a two-year low in keeping with the recession fears. Veteran economist David Buik took to Twitter to point out that the FTSE’s lows meant that the London exchange had effectively made no gains since 1999. The rule of thumb for analysts is that January’s performance can indicate the rest of the year, but January 2018 was similarly strong and the disappointing economic data release throughout the year led to market sell-offs across the Dow, S&P and Nasdaq in the autumn.
Gold is currently at £1,008.17 per ounce – around £50 per ounce higher than this time last year but below the month’s peak at £1,024 per ounce. The price in Sterling has been heavily affected by Brexit’s impact on the Pound’s strength and desirability; Brexit progress in October 2018 put the gold price as low as £899 per ounce, but since then gold gained 13.9% in value in 12 weeks. Gold in USD is currently at $1,322.88 – up over $100 per ounce since mid-November.
Currency volatility has seen domestic prices fluctuate but the outlook is good for gold. Despite slowing growth and concerns over credit debt, China’s annual investor demand stayed roughly even in 2018, while demand in South-East Asia and the UK rose by up to 12%. Mining firms Newmont and Barrick Gold both made the news in recent weeks, with Newmont Mining purchasing Goldcorp and Barrick acquiring Randgold – a sign that there is interest in development in the gold mining industry.
The expectation is that gold will continue to gain value. Analysts forecast consistent prices above $1,300 per ounce this year, with some suggesting that gold – in the right (turbulent) circumstances could surpass the psychological $1,360 barrier – the common line of resistance for the price of gold in USD terms. $60 might seem a small gain but it’s a key indicator of strong sentiment for gold and low confidence in currencies, and historically beating this milestone leads to much higher gold prices.
2018 Gold Price Forecast:
The January boost in stock value has surprised and impressed experts all over the world as the markets reach record levels. The S&P500 Index is up to 2,747 points and the FTSE 100 is sitting at around 7,724 points, with Goldman Sachs reporting that the world economy is outperforming predictions for the first time since 2010 at a 4% growth rate.
The Daily Telegraph offers a positive outlook for investors:
The boom for stocks is good for the world economy but traditionally bad for gold. When stock markets do well the need for gold drops off and sales usually follow, but a Reuters article from November 2017 pointed out that as stock prices rose last year the demand for gold remained; acting as protection against exposure to avoid another 2008 style market crash.
Stocks might not be knocking the value of gold down, but increased currency strength could. The US dollar has been fluctuating in value for the past year but is now steadily rising in value – a worry for the price of gold. There are fears that the Federal Reserve could increase interest rates in 2018 to bolster the increased value of the dollar, which would hurt gold prices.
Fortunately for gold
President Trump is at risk in both the House of Representatives and with trade disputes in 2018
A significant driving factor for increased gold prices in 2017 was the nuclear missile tests carried out by North Korea. Every test saw a corresponding rise in gold prices and despite a new-found willingness to enter talks with South Korea, there seems no end
The additional driving factor for 2018 will be income growth. The world economy is growing. India has recovered from the government’s radical
The stock markets are doing well, gold hasn’t suffered at its expense, Dollar and Sterling values are uncertain, and international disputes are in full swing. The stage is set for gold prices to rise strongly in 2018.
2017 Gold Price Forecast:
After an incredible year for gold in 2016, we take a look at
HSBC’s James Steel appears to agree with this point of
Joni Teves of UBS supported this in an LBMA report, predicting an 8% rise in the gold price in the coming
This view is not shared unanimously amongst the other contributors to the LBMA
However, much of this depends on the pace and scale of these interest rate hikes, and the dovish tone of the Fed in this month’s meeting indicated that further interest rate hikes are not as certain as first believed.
Rising inflation is also a potential concern. Should the pace of inflation get out of hand, then investors will flock to gold as a means of maintaining the value of their
Furthermore, conditions in
Europe are well suited to another gold
2016 Gold Price Forecast:
Opinion within the industry appears divided as to what the gold price is going to do in the coming twelve
combined with wider market turmoil, could see prices shoot up as demand increases given gold’s historic appeal as a ‘safe-haven’ during uncertain economic
Such a view is shared by
DoubleLine Capital CEO Jeff
As ever, such troubled times should generate
Gold’s defiant performance in an otherwise bearish commodity market indicates that it is the safest place to invest at the moment, and demand could be set to increase over the coming