Where Will the Majority of Demand for Gold Come From in 2020?
The New Year is right around the corner. While you’re obviously promising yourself to be a better human and live a healthier lifestyle, don’t forget to include ‘making better investments’ to your New Year resolution list.
Stocks, bonds, government securities, and real estate are all tales of the past. This New Year take your portfolio one notch ahead and diversify it by adding a bit of glitter—we are talking about gold!
In this post, we will help you forecast the demand of gold for the year 2020. Take a look:
How did gold fare in the year 2019?
A couple of years ago, critics labeled gold as an unloved asset class. Thankfully, the trends have been changing. In fact, ever since the effects of the 2008 faded away, gold prices have gained momentum like anything.
As per the latest figures, gold prices hit $1,548.70 per ounce on September 3, 2019. If you compare this figure with the year before, the surge is equal to around 20%!
Before assuming how gold would fare in 2020, you need to understand the factors that influenced its price in 2019. At the present, the world is engulfed with geopolitical uncertainties.
The rising tensions in the Middle East, the repercussions of Brexit in the UK, and the infamous US-China trade war—are all forcing investors to opt for safer assets like precious metals. Investors are generally assumed to be risk-averse and gold works as a safe-haven for them.
This drives gold demand up! The Fed’s decision to reduce the interest rates in July 2019 also worked in favor of gold as investing in gold became more profitable than investing in bonds.
Where are we heading in 2020?
The CNBC predicts a safe haven for gold in 2020. This is because the economy is expected to weaker. A weaker economy is expected to translate in stronger gold.
So far, the US-China war has been dominating the trade prices of gold but in 2020, the elections are expected to take on a leading role. This, along with the growing silver deficit might prove to be beneficial for gold.
As the country is all set to replace President Trump and the uncertainty is gaining momentum, the Federal Reserve is also seen loosening the monetary policy and cut down rates even further.
So far things seem good, but as the China-US feud softens, the trends might reverse. Thankfully, the elections will take the center stage by then and lower the interest rates.
Lower interest rates prompt investors to flock toward gold. Going back to the basic law of economics—a rise in demand raises prices. This will push gold prices up.
As per another report, the US national debt has been rising for the past few decades and the trend is expected to continue as we enter 2020.
In the past 77 years, the figure has increased by 40,000%! As national debt rises, citizens are expected to channel their savings toward gold—to protect themselves!