Original title: Gold prices continue to hover, what is the trend in 2020? The four major institutions each express their opinions, but the bulls have the upper hand. The direction of the Federal Reserve will be the key
Recently, the gold price has been hovering between the support level of 1,450 US dollars and the resistance level of 1,480 US dollars. Institutions have given different predictions about the outlook for gold prices in 2020 and beyond. TD Securities and Dutch International believe that the Federal Reserve's interest rate cut or global economic slowdown will support the price of gold, but the French Foreign Trade Bank believes. The more optimistic US economy will be a stumbling block to the rise in gold prices. Agnico Eagle, on the other hand, predicts that the bullish cycle of gold prices is still ongoing and is expected to rise to $2,000 in two or three years.
The four major institutions predict the trend of gold prices, and they all have different opinions
① TD Securities: Another rate cut by the Federal Reserve will boost the price of gold in 2020
On December 2, TD Securities indicated that since the Federal Reserve may cut interest rates again in 2020, the price of gold has successfully remained above $1,450 per ounce.
The strategist at TD Securities wrote in the report: “Despite the record high sales in the stock market and online Black Friday, the price of gold remains above $1,450 per ounce because the asymmetry in the Fed's reaction function indicates that the Fed may cut interest rates again. There is still a long way to go until the rate hike is likely to increase the inflation rate, thereby curbing real interest rates and maintaining the attractiveness of gold in the investment portfolio.”
The TD Securities strategist added in the report that as the US economic growth slows, the Federal Reserve is expected to cut interest rates twice more in 2020, which will provide upward momentum for the gold market.
② Dutch International: Gold prices will continue to be supported throughout 2020 due to uncertainties surrounding trade and global growth
The ABN AMRO price forecast shows that by 2020, the price of gold will be well above 1,450 US dollars, but not much higher than 1,500 US dollars; uncertainty surrounding trade negotiations and global economic growth may still be the main driving force for gold.
The bank expects the average price of gold to be 1,500 US dollars in the first quarter, fall to 1,470 US dollars in the second quarter and then rise back to 1,480 US dollars in the fourth quarter. According to ING's report, by 2020, the average price of gold will be around 1,475 US dollars.
The potential for a further increase in gold prices will depend on the Fed's choices next year. Due to trade uncertainty and concerns about global economic growth, Dutch International does believe that the price of gold will be higher than the current level. If the Federal Reserve becomes more dovish, this will lead to a further increase in the price of gold.
According to Dutch International, the outlook for 2020 is based on the strong performance of gold this year. Gold prices once rose 21% this year. Given the increasing uncertainty in the global economy, slowing economic growth, and escalating trade tensions, the strong performance of gold should come as no surprise. These factors have increased the appeal of safe-haven assets such as gold. Furthermore, the more moderate policies of central banks also provided support for gold prices.
③ French Foreign Trade Bank: 2020 may be a difficult year for gold prices, and there won't be much room for growth
In contrast, the French Foreign Trade Bank is relatively pessimistic about the outlook for gold prices. The bank lowered its gold forecast for 2020. The average price of gold next year is expected to be around 1,370 US dollars, lower than the previous average forecast of 1,420 US dollars. The bank believes that the outlook for the US economy is more optimistic, and it is expected that the current Fed's interest rate cut cycle has come to an end.
The latest third-quarter GDP data is an example of the resilience of the US economy. Looking ahead, however, the risk of US economic growth is rising. The better-than-expected economic data also affected interest rate expectations, as the market dampened calls for further interest rate cuts. The Chicago Mercantile Exchange (CME)'s US Federal Reserve observation tool shows that the market expects the probability of interest rate cuts in June next year is less than 50%, and there is only a possibility of about 50% by the end of next year
The French Foreign Trade Bank pointed out that weak consumer demand in India and China is a limiting factor in the gold market. Although the outlook for gold prices in 2020 is not very optimistic, the $12.5 trillion negative yield debt should provide solid support for tomorrow's gold price.
④ Agnico Eagle: Gold is expected to reach a high of $2,000 per ounce in two or three years
Agnico Eagle CEO Sean Boyd (Sean Boyd) is far more optimistic than before. He believes that the current bullish cycle of gold prices is still ongoing, and it is only a matter of time before the gold price level reaches 2,000 US dollars/ounce.
In an interview, Boyd said, “We are still in the gold bull market that began in 2015; this is just the beginning. We believe that the price of gold in US dollars will reach a new high during this cycle. Eventually, the price of gold will rise to a high of $2,000 per ounce, and this may take two to three years.”
Boyd pointed out that the current price of gold is really nothing to worry about. Considering the stock market situation, gold actually performed quite well.
However, Boyd added that junior miners have yet to see that the price of gold has reached a level where investors can enter the market. He himself believes that the current price of gold is not enough to attract a large amount of new capital.
Daily chart of spot gold
According to Huitong Finance's Easy Huitong software, at 10:38 Beijing time on December 3rd,
Spot gold
Reported at $1462.35 per ounce.