In the first quarter is expected to price in 1508 dollars per ounce, and in the last — 1550 dollars, from the current level of profitability is zero, it follows from the consensus forecast, prepared by the Agency Bloomberg survey of analysts.
In recent weeks, gold has risen amid the outbreak of the coronavirus in China, the high achieving 1590 dollars per ounce. According to the Director group market research World Gold Council (WGC) Alistair Hewitt, "for evaluating the potential impacts of coronavirus is still too early, because now we obviously see only the initial stage of the spread of the disease. China is the world's largest consumer of gold, and any change in the dynamics of economic growth and consumer spending may affect the demand for jewelry. The slowdown in the global economy could spur investment demand for gold. In General, it is difficult to make assumptions about what may occur, and to predict the results".
meanwhile, according to WGC experts, a favorable for the growth of gold period factors will continue to influence prices in 2020.
In particular:
- financial and geo-political instability;
- purchases of gold by Central Banks;
- high volatility due to speculative positions situational;
- price volatility and the expectation of lower economic growth will weaken consumer demand in the short term, but longer term structural economic reforms in India and China will support demand.
Environment for gold investment remains favourable geopolitical risks, low interest rates and high yield risky assets.
One of the main drivers of gold prices in the short and medium term to preserve the value in comparison with the yields of other risk-free assets such as government bonds with short maturities.
gold does not bring a coupon, but today 90% of gobongo developed countries traded with a negative yield. In particular, government bonds of Germany, France, Switzerland save the capital invested in them. Compared to them, gold looks attractive — not earning coupon income, but, at least, not lose.
For the last four years have seen a strong correlation between gold prices and the total amount of bonds having a negative yield. Now the volume of bonds with a negative yield reached more than 12 trillion dollars.
Negative returns in government bonds in Europe — is not new, in 2019, the majority of the world's Central Bank reduced interest rates, and most likely this situation will last for a long time. And gold, according to statistics, has always shown a good yield of 12-24 months from the date of the termination of the interest rate increase.
If the investment in gold the situation is favorable, then jewellery demand — on the contrary. The risks of a recession increased in the second half of 2019, now retreated, but the growth rate in 2020 will be reduced in comparison with the previous year. And 2021-2022 year, some economists expect a slowdown in the development of the main economies in the world. Together with the increased volatility in the price of gold this could lead to a decline in demand for jewelry and reduce the consumption of precious metal in the industry.
China's economic slowdown and rising prices for everyday goods will reduce buying power. In addition, among younger consumers, are becoming more popular decoration light weight with fashionable design.
In India negative effect of high prices is exacerbated by the increase in import duties on gold from 10% to 12.5%. Additional problems may arise due to the introduction of compulsory marking of articles of gold.
overall gold demand in 2020 will remain weak. But further in India, and in China economic reforms should support growth and internal consumption, according to World Gold Council.
the Volatility of gold in the past year increased along with prices, and probably will continue to grow in 2020, especially in moments of deterioration of the political and economic environment.
