Gold Bars
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Last year was challenging for the gold price, precious metals consultancy Metals Focus’ ‘Gold Focus 2019’ report, which was published on Monday, shows.
Against the backdrop of a healthy US economy, strong employment and signs of US inflation picking up, most analysts expected US policy rate increases to continue throughout the year and during most of this year.
In contrast, the ECB maintained a loose monetary policy, faced with lacklustre conditions across the European union (EU).
These factors weighed on the gold price, both as a result of a rising opportunity cost of holding the metal and also as a result of the stronger dollar.
Trade tensions, which eventually culminated in a trade war between the US and China, boosted the dollar.
The combination of these conditions limited institutional investor appetite for gold, the report authors indicate.
However, conditions were becoming “more supportive” of a late 2019 rally in the gold price, the report stated.
Metals Focus expects macroeconomic conditions to remain generally positive for gold over the rest of this year, which should encourage professional investors to remain net buyers overall. This should, in turn, offer support to prices.
Nevertheless, the firm warned that some headwinds remained on the horizon that could limit gold’s upside.
Metals Focus, therefore, forecasts a conservative 3% year-on-year increase in the gold price to about $1 310, on average, for this year.