The price of gold is expected to average $1,425/oz. next year, up from $1,360 this year, the latest Reuters poll shows. (Photo courtesy of United Precious Metals)
New York—Gold is expected to average more than $1,400/oz. next year, up from $1,360 this year, a recent Reuters poll shows.

Reuters publishes a precious metals price poll every quarter, combining predictions from two dozen or more analysts.

In the latest poll, done at the beginning of September, analysts predicted gold would average $1,393/oz. in the third quarter, $1,416 in the fourth quarter and $1,360 for the entire year.

The 2020 average for gold is forecast to rise to $1,425/oz.

The Reuters poll represents averages, not the actual price gold hits at any point during the day, and includes predictions from more than 30 participants, which is why it is less bullish than the note released by Citi analysts in mid-September, which predicted spot gold prices could top $2,000 an ounce in the next year or two.

Still, both sources point toward the gold price going up.

Unlike other metals, which are tied to market fundamentals such as supply and demand, gold is “very responsive” to certain macro-economic developments, said Johann Wiebe, a lead metals analyst on the GFMS team at Refinitiv.

Currently, those include the Federal Reserve lowering interest rates and the ongoing U.S.-China trade war.

“People are uncertain; that’s why the gold price goes up,” he said, noting the best example of gold prices reacting to macro-economic conditions was when it skyrocketed during the 2008 financial crisis, as investors lined up to buy gold investment bars and coins amid the global financial meltdown.

In the jewelry industry, the high price of gold led retailers to push buyback programs while swapping out gold for silver in display cases.

While Wiebe recognizes there is a lot of uncertainty in the world right now, he said Refinitiv is more modest in its exact forecast for gold and will need to see economic factors take a firmer hold before it predicts gold will breach $2,000 an ounce.

Platinum and Palladium Prices
Wiebe said platinum will remain less expensive than gold for the foreseeable future, though the Reuters poll has the white metal’s price rising next year too.

In the third quarter, the poll has platinum averaging $858/oz. and climbing to $880 in the fourth quarter, finishing the year with an average of $851.

In 2020, the poll has the average platinum price at $926/oz.

Analysts are also bullish on palladium.

Ten years ago, the white metal averaged around $300/oz., data supplied by Refinitiv shows (see chart below).

20191016 Metals prices

Today, the price of palladium is well over $1,000/oz. due to strong auto catalyst demand driven by tighter emissions legislation in all major markets and the route toward the widespread adoption of electric vehicles going through hybrids (palladium is used to cut pollution from gasoline engines and is used in hybrid vehicles too).

Supply is just not high enough, Wiebe said, and the market is in repeated, severe deficit.

In the Reuters poll, analysts predicted palladium will average $1,478 in the third quarter and $1,465 in the fourth, finishing the year at $1,448/oz. The predicted average for 2020 is only slightly lower, at $1,444.

Silver Shadows
The price of silver is expected to mirror that of gold in the near term, rising in the fourth quarter and again next year.

The Reuters poll has silver averaging $15.79 an ounce in the third quarter before increasing to $16.13 in the fourth. The metal’s average for 2019 is expected to land at $15.59.

Next year, the price of silver is expected to increase to an average of $16.73.

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