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MajorsMar 02, 2020
Price of Gold Expected to Stay High in 2020
The metal is predicted to average more than $1,500 in 2020, according to a recent Reuters poll.
Gold is expected to average $1,520 an ounce in the first quarter and $1,551 overall in 2020, a recent Reuters poll shows. (Photo courtesy of United Precious Metals)
New York—Gold is predicted to average more than $1,500 an ounce in 2020, according to a recent Reuters poll, up from the $1,393 it averaged last year.
According to a precious metals price poll conducted by Reuters and shared on Refinitiv’s Eikon platform, analysts predict gold will average $1,520 in the first quarter, $1,542 in the second quarter and $1,551 for the full year.
Reuters conducts its poll every quarter, combining predictions from two dozen or more analysts. It represents an average, rather than the actual price gold hits at any point during the day.
The gold price rose dramatically in the second half of 2019, jumping from an average of $1,283.95 in May to $1,498.80 in August.
It hovered somewhere around the $1,500 mark for the rest of the year, finishing with an average price of $1,476.04 in December, according to Kitco.
The gold price rose for several reasons last year, said Johann Wiebe, a lead metals analyst on the GFMS team at Refinitiv.
Negative bond yields encouraged an appetite for gold as an investment, he said.
Also impacting the gold price was general uncertainty in the U.S. economy stemming from macroeconomic developments, like the trade dispute between the United States and China.
To date in 2020, the price of gold has hit its highest level in seven years, peaking at $1,671.65 on Feb. 24.
While it’s come down slightly since then, the metal’s price is expected to remain elevated throughout the year.
Wiebe said concerns around coronavirus will keep gold prices aloft, adding that the spread of the disease has sparked discussion about “wide macroeconomic implications.”
Automobile sales in China, for example, have plunged in the past couple of months.
The disease will have ramifications on global economic growth, and the gold price will remain elevated because of that, Wiebe said.
The current correction in the stock market also is keeping gold prices high.
Ultimately, though, he said once a vaccine is found and restrictions on travel and public gatherings are lifted, the gold price is likely to drop considerably.
Platinum and Palladium Predictions
Platinum is predicted to remain significantly less expensive than gold this year, with the Reuters poll showing the white metal will average $938 an ounce in the first quarter, $962 in the second quarter and $979 for the year.
Wiebe said a declining demand for platinum jewelry in China is having a
big impact, as is the aforementioned decline in automotive demand in the country.
And, as there continues to be a move toward gasoline and electric cars, and away from diesel, platinum is coming under pressure. (Platinum is often used for catalytic converters in diesel cars.)
He noted on the supply side, producers in South Africa are making efforts to consolidate production.
However, because rhodium and palladium—both of which are doing “so incredibly well,” with prices skyrocketing—are often byproducts of platinum production, there still are some miners indicating they will continue producing and stockpiling platinum.
So, supply will stay elevated or possibly increase this year, Wiebe said, “even though it should be moving in the other direction to support prices,” while demand is expected to increase, albeit slowly.
This means, he said, there is some upside for platinum prices but “not a huge amount.”
Palladium, meanwhile, has been performing well and has been the “darling” of the industry for some years now, Wiebe said.
As emissions regulations across the world tighten, palladium demand will increase because of its use in gasoline vehicles.
The decline in car sales in China could bring the price of palladium down a bit too, but since supply won’t increase much in the next two years or so, prices for the metal will remain elevated, Wiebe said.
The Reuters poll predicts it will average $2,056 this year.
Silver Softness
The Reuters poll has silver averaging $18.45 an ounce in 2020, up from $16.21 in 2019.
While silver generally follows the gold price trend, Wiebe said when looking at the gold/silver ratio—the amount of silver it takes to purchase one ounce of gold—silver has been lagging for a few years now.
It’s currently at 95.50 as of Monday morning, according to GoldPrice.com. (Historically, it’s usually somewhere around 65 or 70, according to Wiebe.)
“I think we’re still a bit high,” he said. “I think silver is still cheap where gold’s expensive, so silver still has some potential catch-up to do there.”
But, he added, there’s a lot of silver in the market right now, which “keeps a lid on the opportunity for silver to significantly move.”
And, as there continues to be a move toward gasoline and electric cars, and away from diesel, platinum is coming under pressure. (Platinum is often used for catalytic converters in diesel cars.)
He noted on the supply side, producers in South Africa are making efforts to consolidate production.
However, because rhodium and palladium—both of which are doing “so incredibly well,” with prices skyrocketing—are often byproducts of platinum production, there still are some miners indicating they will continue producing and stockpiling platinum.
So, supply will stay elevated or possibly increase this year, Wiebe said, “even though it should be moving in the other direction to support prices,” while demand is expected to increase, albeit slowly.
This means, he said, there is some upside for platinum prices but “not a huge amount.”
Palladium, meanwhile, has been performing well and has been the “darling” of the industry for some years now, Wiebe said.
As emissions regulations across the world tighten, palladium demand will increase because of its use in gasoline vehicles.
The decline in car sales in China could bring the price of palladium down a bit too, but since supply won’t increase much in the next two years or so, prices for the metal will remain elevated, Wiebe said.
The Reuters poll predicts it will average $2,056 this year.
Silver Softness
The Reuters poll has silver averaging $18.45 an ounce in 2020, up from $16.21 in 2019.
While silver generally follows the gold price trend, Wiebe said when looking at the gold/silver ratio—the amount of silver it takes to purchase one ounce of gold—silver has been lagging for a few years now.
It’s currently at 95.50 as of Monday morning, according to GoldPrice.com. (Historically, it’s usually somewhere around 65 or 70, according to Wiebe.)
“I think we’re still a bit high,” he said. “I think silver is still cheap where gold’s expensive, so silver still has some potential catch-up to do there.”
But, he added, there’s a lot of silver in the market right now, which “keeps a lid on the opportunity for silver to significantly move.”
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