Marginal recovery in gold price expected this year – Metals Focus
Last year was challenging for the gold price, precious metals consultancy Metals Focus’s ‘Gold Focus 2019’ report, which was published last week, shows.
Against the backdrop of a healthy US economy, strong employment and signs of US inflation picking up, most analysts expected US rate increases to continue throughout 2018 and during most of this year.
In contrast, the European Central Bank maintained a loose monetary policy in 2018, faced with lacklustre conditions across the European Union.
These factors weighed on the gold price, as a result of both a rising opportunity cost of holding the metal and the stronger dollar.
Trade tensions, which eventually culminated in a trade war between the US and China, boosted the dollar.
The combination of these conditions limited institutional investor appetite for gold, the report authors indicate.
However, conditions are becoming “more supportive” of a late 2019 rally in the gold price, the report states.
Metals Focus expects macroeconomic conditions to remain generally positive for gold over the rest of this year, which should encourage professional investors to remain net buyers overall. This should, in turn, support prices.
Nevertheless, the firm warns that some headwinds remain on the horizon, which could limit gold’s upside.
Metals Focus, therefore, forecasts a conservative 3% year-on-year increase in the gold price to about $1 310/oz, on average, for this year.
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