In an increasingly uncertain environment, investors poured into gold in 2019 looking to balance higher stock prices, a trend that will likely continue.
High risk due to financial and geopolitical uncertainty, along with low interest rates that are keeping stock prices high and valuations at extreme levels, will likely continue supporting gold investment demand into 2020, the World Gold Council (WGC) said on its Goldhub blog this week.
«As we look ahead to 2020 we believe investors will face an increasing set of geopolitical concerns, while many pre-existing ones will likely be pushed back rather than being resolved,» Juan Carlos Artigas, director, Investment Research, said in the post on key trends to watch in the coming year.
«Within this context, we believe there are clear reasons for higher levels of safe-haven assets like gold,» he said.
Investment Demand to Remain Robust
The price of gold, which crossed the $1,500/oz mark in the third quarter, was up by almost 15 percent as of the end of November. Gold-backed ETFs have also seen strong inflows, with global gold-backed assets under management (AUM) growing by 35 percent so far this year as a result of increased investment demand and price appreciation.
The analyst noted that gold price volatility may remain due to momentum and speculative positioning, though this could result in softer consumer demand in the near term, especially with weaker economic growth expected. However, structural reforms in China and India should bolster long-term demand, WGC said.
Central banks are also expected to continue their net purchasing trend – as of November, 12 percent up from last year – though at a lower rate than the record highs of previous quarters.
