by SignalFactory · January 30, 2020 | 08:37:47 UTC
prices could test $1,700 an ounce before the end of the year due to the
combination of central-bank monetary policy and political and economic
uncertainties, Refinitiv GFMS said.
consultancy issued the outlook while releasing its annual Gold Survey report
early Thursday in London. In 2019, gold posted its highest annual average in
the rally likely is not over, said Cameron Alexander, manager of
precious-metals research with Refinitiv. The macroeconomic backdrop should
remain supportive for gold, with political and economic uncertainties likely to
lead to stock-market volatility and higher risk aversion, Alexander said.
“Central banks’ monetary policy is likely to remain on the loose
side, with a possibility of at least one interest-rate cut from the U.S. Fed
later in the year, particularly should the U.S. economy show renewed signs of
stagnation,” said Alexander. “While demand from key Asian markets will likely remain
weak this year, ongoing central-bank purchases and renewed investor interest
will lend support for higher gold prices.
“The spike in the price was largely attributed to a pick-up in
investor interest, particularly among the professional investor community,
which was evidenced by positioning on Comex and a surge in inflows into gold
ETPs [exchange-traded products],” Alexander said.
“Renewed interest was driven by an escalation of geopolitical
tensions, increased concerns over the global economic and trade prospects as
well as the gold’s improved price outlook. Furthermore, gold’s appeal was
boosted by a shift among the world’s key central banks towards a more
accommodative monetary policy to support slowing growth and weak inflation.”
managed-money positions jumped by 15%, or 104 metric tons, in the second half
of 2019, Refinitiv said. While backing off from the peak, the 819 tons as of
year-end was still an increase of 362% from the end-of-2018 level. Meanwhile,
ETP investors added 387 tonnes of gold during 2019, with global holdings
reaching a new historical high of over 2,700 tonnes by year-end, Refinitiv
bar and coin retail investment fell by 17% in the second half of 2019,
Refinitiv said. Bar demand in India fell by 53%, hurt by higher import duties
and high prices in the local currency. China, meanwhile, posted a 2% rise in
bar investment during the second half, driven by a pullback in the domestic
equity market and rising trade tensions with the United States. Global coin fabrication
fell by an estimated 17% to 135 tonnes in the latter part of 2019, the
metals-research firm reported.
consumption by the jewelry sector also declined, with fabrication demand
falling by 17% in the second half of the year, the consultancy reported. This
demand fell in China by 10% amid a slowing economy and higher gold prices.
India’s jewelry demand fell by 36% in the second half of the year.
On the supply side, Refinitiv said environmental concerns and a crackdown on illegal mining led to a fall in gold output during 2019.
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