To bet on a rise in the gold price in the coming year, after the precious metal has formed a solid support, could pay off, according to the analysts of TD Securities.
Although gold could fall to $1,425 an ounce in the short term, the long-term picture seems to be clearly pointing to the yellow metal reaching $1,650 an ounce by 2020, the analysts said in their outlook for next year. According to the analysts, USD 1,650 per ounce of gold is still possible next year once the weak long positions are “shaken off” and only moderate growth in the global economy continues to keep interest rates low and the Fed’s monetary policy active. TD Securities expects a large rebound in the gold price in the second quarter of 2020, which experts believe will be triggered by further increases in the money supply from the Fed, slower economic growth and central bank gold purchases.
In their forecast, the analysts assume that the Fed will cut the key interest rate twice by mid-2020 and that the ECB will proceed in a similar way. Despite the “happiness feelings” of many investors at the improved trade relations between the US and China, which the White House itself had previously destroyed, TD Securities expects economic data from the US to be rather weak in the coming months. This will lead to further Fed rate cuts in the market. Even a recession is not yet completely excluded from the markets, according to the analysts. Weaker US growth should also keep the US budget deficit at a high level.
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