Gold Bullion Bulletin – 28 July

Welcome to our weekly gold bulletin – we’ll round up all of the latest investment news and pertinent updates from global markets here each Friday so you never miss a breaking news story or expert comment.

There has been a wealth of news emerging this week as the G-20 summit nears with gold continuing to stand strong as an investor favourite. The market sentiment is bullish to say the least so read on to find out the key developments from across the last seven days.

Could gold prices reach $1600 in 2020?

2020 may still be six months or so away but experts are already predicting that we could see record highs in gold prices in the New Year with some predicting that the price of gold could reach $1600.

A number of top analysts say that consolidations in recent gold prices set the stage for a further push in the coming months, with $1600 in 2020 entirely possible. They say that prices will likely end around the $1475 mark this year, with a sharp rise then predicted in the New Year. A report says the upcoming FOMC meeting, which is set to take place in July, the price of the US dollar and the Fed’s dovish position will all create opportunities for gold. In a regular Global Markets note, it is quoted, “Gold consolidates ahead of the July FOMC meeting, creating a set-up for further gains… Crosscurrents and softer inflation led to a dovish Fed shift. We look for 75bp of cuts in 2019 and 75bp in 2020… While consensus growth expectations suggest US GDP growth around 1.8% Q/Q SAAR in the coming four quarters, our tracking suggests that is likely to be about 0.5pp lower.”

“Though the USD still retains a yield advantage over much of its peers in the G10, we think the USD, on balance, remains destined for a course correction lower.”

TD Securities analysts note that many central banks are poised to adopt less stringent monetary policies, which leads to a “perfect world” for gold, giving further credence to its forecasts of a gold price rally towards the end of the year. The key message here of course continues what we have been hearing for some time – from both a global economic and geopolitical viewpoint, conditions continue to favour gold as an investment class and strengthen its appeal. The net result is an almost certain price increase, making now the optimal time to invest.

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 World Gold Council says stage is set to drive gold prices higher

The World Gold Council has stated this week that the stage is perfectly set for gold prices to increase after prices hit a six-year high this week.

“Risk and uncertainty remain elevated and in an environment with low opportunity costs, gold will continue to be an attractive asset to own,” said World Gold Council’s director of investment research, Juan Carlos Artigas.

The growing threat of recession will push central banks to make monetary policy changes he says, — something which will support gold price increases. He added. “Given where rates are, central banks can only cut so much. They will need to invent new tools to support growth and we don’t know what impact that will have. Equity valuations are extremely high, especially when you consider where bond yields are. Traders don’t want to miss out on higher stock prices, but they are also turning to gold to mitigate their risks.”

Artigas also points out that there is a lot of uncertainty in the market currently with the Federal Reserve forced to tread lightly – any unexpected action on their part or moves against current trends and market expectations will create vitality. This volatility will of course favour gold as an asset class and investment, especially if we see the US dollar continuing to battle headwinds.

Could G-20 meeting this weekend push gold higher?

Tomorrow (Saturday) will see the sparring US and Chinese presidents meet face-to-face at the G-20 meeting. Following months of threats and tariff hikes which have sparked a trade war between the two nations – causing widespread discomfort and unease on the global scale – President Trump and President Xi are set to sit down for talks in Osaka, Japan.

With growing discontent on both sides, and statements already issued to re-ignite sparks, it’s likely that gold could be the winner.

We’ve already seen over the last few months how import tax increases and talk of a trade war have led to market losses, plummeting stock prices and a weak US dollar – so we could very easily see a repeat of this should the meeting not go well.

President Trump has already sparked the tinder saying that he is fully prepared to impose additional tariffs on Chinese goods being imported to the USA if talks don’t go well this weekend. 

Should that happen, we can expect gold prices to climb higher in the face of heavy demand for the safe haven

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