Financial uncertainty, low-interest rates, and slowing global economic growth are expected to provide a supportive environment for gold investment in 2020.
Geopolitical and economic uncertainties on the horizon will likely bolster gold investment demand in 2020, including among central banks, the World Gold Council (WGC) said in its «Gold Outlook 2020» report published this week.
In addition, a weak dollar and ongoing negative interest rates are boosting gold’s appeal, spurring investor demand for the precious metal to protect their wealth.
However, the report noted that gold price volatility is expected to remain because of momentum and speculative positioning, and this, along with expectations of weaker economic growth, may result in softer consumer demand near term, while structural economic reforms in India and China will support demand in the long term.
Strong Performance to Continue
Investment appetite for gold was strong in 2019, evidenced by strong ETF flows and robust central bank demand. The yellow metal had its best performance since 2010, rising by 18.4 percent in U.S. dollar terms last year, outperforming bonds and emerging market stocks.
The price of gold reached a seven-year high in January 2020, amid heightened U.S.-Iran tensions.
«We expect that investor positioning related to this specific event will likely influence gold’s performance in the near term. But over the medium term, broader financial and geopolitical uncertainty and developments in monetary policy will play a more important role,» WGC said in the report, noting gold's «generally positive implied performance» for 2020.
