Gold price forecast and trends for 2020

Colin Baseman

The majority of price forecasts do not make much sense. There are numerous factors to consider; various constantly fluctuating variables that usually even the most sophisticated estimates fail to hit the mark.

Besides, some analysts base their forecasts on a single statement: “Rates of interest will grow, thus gold’s value will drop." That is even not a correct proclamation, leave off a reasonable forecast (it is an actual exchange rate that influences the gold’s price - subtract inflation from the asset rate).

As an alternative, our 2020 gold rate estimate will explore the main factors that influence the gold marketplace to identify whether each of them will drive the rate up or down the current year. We will display the possible costs dependent on these factors, on top of some long standing forecasts.

Here we share the main aspects that probably may influence the gold’s price current year:

  • USD
  • Investment demand
  • COMEX trading volumes
  • Central Bank purchase
  • Technical indicators
  • A new supply of mines
  • Upcoming financial and currency factors

USD

The DXY US dollar index concluded 2019 with a minimal annual movement, which increased by 0.24%. In the meantime, gold grew to 18.8% the previous year.

USD with Gold are contrariwise related in about 2/3 of cases.

Investment demand

Interest in physical gold in America has been low for several years. The overall demand in the asset has increased.

Financiers ' interest in the metal is expected to stay high, as the causes why they purchased gold - to protect from overrated stocks and contrary to the likelihood of a downturn - have not yet been realized.

COMEX trading volumes

Now the volume of gold dealing on the exchange is bigger than ever.

In the major futures stocks, sellers are making more agreements on gold than previously, so it is a fixed bullish pointer. Therefore, the cost increases.

Central Bank purchases

Financial institutions worldwide keep the metal as a reserve commodity. Within the recent dozen years, international banks have purchased the asset at a raced speed. This shows a solid uptrend.

Technical indicators

Mechanical scrutiny is not consistent at all times, though expert dealer Dominic Graziano has accumulated a trading profile with seven numbers exclusively from automatic commerce.

Various analyses indicate an upsurge in the gold’s price for Dominica.

A new supply of mines

Many gold specialists admit that novel deliveries from gold manufacturers will decline. As for the upcoming shortage of gold resources, it does not entail external forces. It is blocked. Besides, manufacturers cannot simply upsurge production, though the rate of gold jumps.

Upcoming financial and currency factors

One of the causes, why we have weighty silver with gold at this period, is the presence of several larger risks. Forecasts expect a time that will ultimately push gold higher.

During 2019, the price of gold showed positive dynamics. After 2018 ended at 1,280 per Troy ounce, the asset’s value was at 1,480 per Troy ounce in 2019. During this year, the value of the metal increased by 15%, although during 2019, the range of fluctuations in the gold’s price was 1270 - 1540 dollars. In 2020, it is projected that the demand for the metal will steadily rise, and the growth rate will depend on the deterioration of the fiscal and political situation around the globe.

Gold price investigation in 2020

Last year, the cost of gold reached a 6-year high at 1,540 per Troy ounce under the effect of the unstable commercial situation worldwide. The drop in interest rates by the banks as a stimulating measure for the economy also raised interest in gold. The continuation of the policy of reducing rates current year by Central Banks will possibly lead to negative values and added issuance of unsecured money. Whereas the volume of gold mining will not increase, the worth of the asset will be greater.

By the finale of 2019, statistics of macroeconomic indicators of countries indicated a stoppage in the global economy, which is becoming a growth factor for the value of the valuable metal. Gold is still a reserve investment asset. The growth rate of the worldwide economy in 2020 will continue to decline, while gold can overcome the 1,600 level and approach the mark of 2,000 per Troy ounce.

The prolonged trade war between the world's two largest markets the US and China resulted in the upsurge in the gold price in 2019. The trade agreement, signing of which was delayed from month to month last year, became the defining factor in fluctuations in the worth of gold. In December 2019, positive statements from the American and Chinese governments ceased to affect financier sentiment, and the cost of gold remained unchanged at the end of the year. Merely the official authorization of the final trade agreement in 2020 will be able to reduce the price of the asset to the level of 1,300 dollars per Troy ounce. At the same time, such a decrease is possible with other stable monetary and political factors, which is unlikely.

The current year, the US currency and its exchange rate against a basket of six leading currencies will have an impact on the rate of gold. The USD is gradually losing its status as the reserve notes, and the instability of the US budget accelerates this process. In 2020, the US will carry out presidential elections. The political struggle between the American ruling party and the opposition will harm the economic situation in the state and on the national currency. Against this background, the demand for gold will increase.

The seasonality factor, which affects the demand for the asset, will adjust the value. This correction will be stronger in a stable political and economic environment around the globe. If geopolitical conflicts intensify, the seasonal decline in demand for the costly asset will have a subtle impact on the value.

On the first business day of 2020, on January 03, gold grew in rate by up to the mark of 1,550 per Troy ounce amid the escalating conflict between Iran and the US. Financiers turned to the safe-haven asset after reports of the murder of an Iranian General in Baghdad, which the US blames. Such geopolitical conflicts will only accelerate the growth of the gold value to the point of $2000.

Currently, political instability will increase, which will increase the demand in gold in place of a backup asset for both investors and banks. The value of gold will grow steadily and correspond to the unstable political situation in the countries.

Prediction for gold rates in 2020

It can be seen that the majority of the powers influencing gold will lead to an increase in price this year.

  • Minimum high: $ 1,700
  • Probable high with a large blow: $ 2,000 (new historical high)
  • Potential high without a crisis: $ 1800
  • Prospective 5-year high: from $ 3,000 to $ 8,000

Gold probability high in 2021: 95%

The key assumption from the investigation is that though gold grows slightly or even drops, its ownership is seldom more significant. This suggests that especially those who do not have a substantial amount should purchase assets at falling prices.

Evidently, many factors both in the long and short term can affect the value of gold.