Gold is set to enter 2020 above $1,500 per ounce after gaining nearly 18 per cent in 2019, the highest annual gain since 2010 when it gained 30 per cent in the fallout of the housing and financial crisis.
These gains were supported by the most significant weekly movement in the last four months during the Christmas holidays. The majority of analysts are bullish for the beginning of 2020, and the latest gold news seems to support them.
As with other securities, gold price is affected by supply and demand and investor sentiment. Gold is unique, however, in that it is rarely consumed but rather held as a store of value.
Because of its historical use as a means of currency, its scarcity and its relatively stable and high value, gold is utilised as a safe haven in times of social and political uncertainty and when global currencies such as the US dollar experience volatility.
We will examine some of the most significant factors influencing gold market news in the new year.
Gold price news
As mentioned, gold is seen by many investors and central banks as a safe haven in times of uncertainty. This is not a steadfast rule and there are multiple factors that influence the price of gold. However, we do tend to see politics, trade and key economic data at the forefront of gold price news.
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Threats of a recession can also increase the pressure on gold’s price as central banks buy in with the intent of supporting their respective currencies if domestic inflation increases.
Bloomberg news recently reported that central bank holdings are the highest they have been in 50 years. The recent drop in the US dollar has led to investors moving their assets into other securities and the fear of recession and global economic downturn has contributed significantly to the upward pressure on the price of gold.
2019 economic and financial news has been dominated by Brexit and China-US trade relations and this is true of gold news and analysis. Brexit passed a major hurdle with the forming of a Conservative Party majority in the recent election. While the prime minister Boris Johnson is promising a swift conclusion to the Brexit negotiations there is still doubt about what that exit will look like and the effect on the EU and UK economies. If the UK leaves the EU before a major trade deal is in place a significant negative influence on the global economy is expected.
Gold price analysis
The current gold price is based on many factors influencing gold news now. The uncertainty created by the trade dispute between China and the US is the biggest factor affecting the gold market latest news and while there has been some progress with the completion of phase one insiders are not confident that this will lead to the end of the dispute.
Creating even further uncertainty is the fact that President Trump, the driving force behind the trade dispute, is in the midst of an impeachment process. Many analysts feel that while trade negotiations have progressed there will be major setbacks as the Trump administration seeks to limit the reach of China, particularly in the tech sector.
China has been investing heavily in home-grown tech and is clear in its goal is to be a global leader in new technologies. This concerns the US as they feel a lot of this progress has been made on the back of corporate espionage and an unfair investment regime which forced American companies to share technology as a prerequisite to doing business in China.
They are limiting the abilities of Chinese tech companies to do business in the US and seeking to prevent them from entering other markets. The most relevant example is the banning of Huawei from accessing US 5G networks and the international arrest warrant issued for Meng Wanzhou, leading to her detention in Canada one year ago. It seems unlikely that trade negotiations will continue unabated with this topic inevitably being put on the table. This is likely to continue putting upward pressure on the price of gold for the foreseeable future in 2020.
The ongoing trade disputes, protests in Hong Kong disrupting Asian markets and inflationary concerns in some of the world’s largest economies like India, Russia and China will continue to place a high demand on gold.
Add in the ever-increasing costs of actually mining gold and it is easy to see why many analysts are predicting similar increases of 10-20 per cent in 2020 as were seen in 2019, with some of the most bullish even predicting record highs over $2,000 per ounce.
Gold price forecast 2020
Investors will be looking to the release of key US economic data early in 2020 for insight into the latest on gold news. The most crucial aspect to the price of gold in the beginning and throughout 2020 will be the outcome of the US-China trade negotiations and the economic ramifications that result.
While the market is bullish overall the decision to invest in gold or gold mining companies should be considered based on your individual risk tolerance and requirements. Follow the latest Gold spot analysis and projections for 2020 at Capital.com.