The Chief Economist of China Industrial Bank has said that he expects gold to go “from strength to strength” in 2020. In a research piece, he cites the ongoing economic uncertainty, widespread geopolitical tensions and falling interest rates as all favourable for gold looking forward over the next 12 months and beyond.
Dr Lu Zhengwei’s research tracks back to 1870, assessing key characteristics and drivers of gold prices in the last century. He says, “Our research showed that gold bull markets are most likely to develop during global currency crises, bond bull markets, commodity bull markets or a combination of all three.”
He notes that we are already seeing the required conditions to further bolster gold from its 15% price rise seen in 2019, saying “…the whole world has entered into an ultra-low or even negative interest rate environment.
This encourages investors to focus on capital gains, rather than yield – a trend that plays to gold’s advantage. Looking ahead, therefore, negative interest rates are likely to provoke further increases in the gold price.”