- WORLD EDITIONAustraliaNorth AmericaWorld
Investing News NetworkYour trusted source for investing success
- Lithium Outlook
- Oil and Gas Outlook
- Gold Outlook Report
- Uranium Outlook
- Rare Earths Outlook
- All Outlook Reports
- Top Generative AI Stocks
- Top EV Stocks
- Biggest AI Companies
- Biggest Blockchain Stocks
- Biggest Cryptocurrency-mining Stocks
- Biggest Cybersecurity Companies
- Biggest Robotics Companies
- Biggest Social Media Companies
- Biggest Technology ETFs
- Artificial Intellgience ETFs
- Robotics ETFs
- Canadian Cryptocurrency ETFs
- Artificial Intelligence Outlook
- EV Outlook
- Cleantech Outlook
- Crypto Outlook
- Tech Outlook
- All Market Outlook Reports
- Cannabis Weekly Round-Up
- Top Alzheimer's Treatment Stocks
- Top Biotech Stocks
- Top Plant-based Food Stocks
- Biggest Cannabis Stocks
- Biggest Pharma Stocks
- Longevity Stocks to Watch
- Psychedelics Stocks to Watch
- Top Cobalt Stocks
- Small Biotech ETFs to Watch
- Top Life Science ETFs
- Biggest Pharmaceutical ETFs
- Life Science Outlook
- Biotech Outlook
- Cannabis Outlook
- Pharma Outlook
- Psychedelics Outlook
- All Market Outlook Reports
Gold edged as high as US$1,777.60 on Wednesday, and the precious metals consultancy believes the bullish trend will continue.
A decline in supply coupled with an increase in recycling will provide a “gentle tailwind” for the gold price this year, according to the Metals Focus 2020 Gold Report.
The yellow metal edged as high as US$1,777.60 per ounce on Wednesday (June 24), and the precious metals consultancy is forecasting that the bullish trend will continue.
“We are expecting really quite a strong rally from here on, seeing prices climb towards the end of the year getting close to the all-time high,” said Adam Webb, director of mine supply at the firm. “And that gives us an average for the year of around US$1,700, up 22 percent year-on-year.”
As optimistic as it sounds, the firm acknowledged that it is a more restrained forecast when compared to some of the more “dramatic” projections other analysts have released over the last few months.
“And a key reason for that is that we would not be surprised to see a period of stabilization or active corrections in the next couple of months,” Webb explained.
However, as 2020 has been a year of much uncertainty, many unknowns still remain — particularly when it comes to gold price motivators for the rest of the year.
A potential coronavirus vaccine or cure could create an outside reaction in markets, the analyst noted.
“Now, even if we are showing restraint there, we certainly entertain the notion that gold prices could continue to move higher beyond 2020, and that’s when some of those levels that others have mentioned might finally be reached,” said Webb.
Mine output expected to fall
Metals Focus is calling for a global gold supply decline of 1 percent for 2020, with output from the mining sector expected to decrease by 5 percent.
The greatest drops in production will be seen in South Africa, Peru and China, countries where mines were shut or where work was reduced in compliance with government lockdown orders.
Russia and Australia, which weren’t impacted by COVID-19 mine closures, will see a drop in output due to new mines reaching steady production rates; this will result in flatter production. Mature assets will also make reduced contributions.
Canada and Bulgaria are expected to provide increased output, stemming from the ramp up of projects.
The director of mine supply at Metals Focus pointed out that even for countries where the pandemic didn’t disrupt production, transportation and logistical issues were unavoidable.
“This year there is increased uncertainty in the forecast (compared to) previous years because the situation is still developing,” Webb said.
“The impact for most countries was felt in Q2, and obviously miners haven’t reported that information yet, and the possibility of future outbreaks (also) needs to be considered.”
Another consideration is the monetary and fiscal policies administered since the pandemic.
Metals Focus calls in its report for a 9 percent increase in physical gold investment as equity market weakness, rapidly rising sovereign debt and low- and negative-yielding bonds drive investors toward the yellow safe haven.
“The UK, for example, has the dubious honor of getting to 100 percent of GDP for its sovereign debt. We also cannot ignore consumer debt and corporate debt,” said Webb. “Some of this has some short-term implications for gold and investment.”
He went on to explain that the monetary and fiscal policy measures that have been enacted are raising the chances of inflation. In turn, that may be exacerbated by “(the) globalization and widening of supply chains, which may well increase costs of goods.”
All in all, the metals consultancy group remains cautious yet optimistic about gold’s ability to continue climbing higher. The price of gold was US$1,763.10 at 3:23 p.m. EDT on Thursday (June 25).
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Latest News
Investing News Network websites or approved third-party tools use cookies. Please refer to the cookie policy for collected data, privacy and GDPR compliance. By continuing to browse the site, you agree to our use of cookies.