While gold is headed for its first annual decline in three years, December was positive for the metal, which rose 5 percent during the month.
The yellow metal spent 2018 under the pressure of a steady US dollar, which sprung from geopolitical tensions, rising interest rates and a lack of investor interest.
“Gold started well in 2018, but a recovery in the US dollar weakened prices and uncertainty on the US-China trade front weakened the yuan, further pulling gold down,” said ABN AMRO’s Georgette Boele.
Despite a tumultuous year, December is now set to be gold’s best month since January 2017, thanks to some stabilization in the yuan and weakness in the greenback aiding in the metal’s recent recovery.
“We expect gold prices to hit US$1,400 next year,” Boele added.
The US dollar dropped 0.2 percent against a basket of currencies following US President Donald Trump indicating that a potential trade deal between the United States and China was “progressing well.”
While an ease in political tensions is usually a positive catalyst for the greenback, December as a whole was ruled by large swings in equities, which market watchers noted boosted the yellow metal’s appeal as a safe haven for investors.
With the yellow metal jumping 5 percent in December, the suggestion from analysts that prices will begin to rebound in 2019 seems even more plausible.
“Political and economic considerations will support prices into the first quarter of 2019,” said Benjamin Lu Jiaxuan, commodities analyst at Singapore-based brokerage firm Phillip Futures.
Brian Leni, founder of Junior Stock Review, agrees with Jiaxuan, telling the Investing News Network,“[w]here is the gold price headed in 2019? Interest rates are, again, key to my predictions on the direction of the price. While I was wrong last year in my assumption that the Fed wouldn’t raise rates, I’m going to go out on a limb and say that they won’t raise rates further in 2019.”
He continued, “therefore, outside of an all-out market crash — which, in the short term, would lower the price of just about everything as it did in 2008 — I believe 2019 will see higher gold prices.”
As of 12:15 p.m. EST on Monday, gold was trading at US$1,281.10 per ounce.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.