Golden rally - so you can christen 2019. A brief chronology of the gold rush looks like this: the precious metal began to rise rapidly in October 2018 from the mark of $ 1,190 per ounce. The price increase continued with a take-off lasting until the very last days of December 2019! In September 2019, gold peaked at around 1,556 USD and rolled back to the area of 1,450. However, in mid-November, growth was resumed and on January 6, 2020 the price reached 1,582. Thus, the full growth amplitude for 15 months was +392 USD per ounce, or 33% per annum! In modern realities, not many business projects can offer investors and shareholders such fabulous profits.
However, will gold prices continue to rise in 2020? After all, even newbie traders know that every impressive growth is followed by a correction-decline. Is it the right time to sell for those who bought gold one year ago? Should I join the army of gold bulls and buy yellow metal now if missed the opportunity to participate in the last year rally? Or maybe it's time to make money on the coming possible roll back in gold prices? These issues are now particularly acute for investors in precious metals.
The analytical department of the FortFS broker believes that the growth potential of gold has not yet been exhausted, and it is 2020 that could be a “gold breakthrough” to levels of 1600-1800.
Despite the overdue price adjustment, do not forget that 2020 is the year of the US presidential election. Whether impeachment will be approved for Trump or the president will be re-elected for a new term? Will Trump lose the election? How will the rivalry of candidates go, and all other similar factors will affect the investment climate on Wall Street. Accordingly, the uncertainty of the election outcome will stimulate demand for gold as a perfect asset against political and economic risks.
Trade confrontation between the US and China will continue throughout the year. There is no such an intermediate trade agreement or compromise reached that is capable of resolving the full depth of the contradictions of the two great economies within one year. Consequently, the topic of periodic exacerbations in the negotiation process will support gold prices. The lack of quick and obvious economic results from the agreements already reached and subsequent doubts over their effectiveness will begin to come to the fore in the media news in the second or third quarter of 2020.
Fed policy in 2020 is unlikely to be hawkish. As it has already become apparent, in mid-2019 the Fed changed its policy dramatically and managed to cut the rate 3 times! Even if during 2020 the rate remains unchanged, the dollar does not look as strong as in 2018, therefore, gold retains good growth potential.
Military conflicts are also an excellent fuel for sustaining rising gold prices. It can be assumed that, as the US-Iran conflict escalates, as well as possible military conflicts between China and India, gold will continue its victorious climb to new heights.
Thus, FortFS broker analysts believe that 2020 will still provide chances to make money on the growth of the yellow metal. Any significant reduction in quotations should be considered as an excellent opportunity for profitable purchases of gold.