Gold price news: the latest outlook for 2020 and beyond
The gold price outlook may look subdued for the rest of 2020, but recent gold price news suggests highs of $8,900 could be achievable by 2030
Gold price news has taken on a new importance during the coronavirus pandemic. Many investors ploughed money into the precious metal, leaving their stocks behind as economic uncertainty sent the markets into freefall.
The latest gold news shows that prices have been trading sideways this month. An ounce costs $1,722 at the time of writing – a modest 2 per cent increase from the start of May. Nonetheless, this is still the highest level seen in seven years.
But here’s the main problem with the gold price outlook: renewed optimism in the stock market is causing its value to slide.
When business activity began to roar back to life in the US, the gold market latest news was nowhere near as rosy. Prices slipped as investors started to regain their appetite for risk, with some being tempted back into equities. Wall Street and the City of London are also keeping a close eye on the race for a vaccine – and whenever a big pharmaceutical company announces that a new milestone has been reached, the markets tend to react positively.
Not everything is simple, though. Many analysts believe that the stock markets could be due for another massive correction – warning that the FTSE and the S&P 500 have failed to price in the full impact of Covid-19. A second wave of infections would change the gold market outlook significantly, as risk tolerance reduces again.
Here, we’re going to look at the gold market forecast both in coming months and in the long term, as the world continues to navigate one of the quickest, sharpest economic shocks in history.
Gold price outlook this year
For those who are firmly of the belief that further headwinds lie ahead for the stock market, there are still plenty of reasons to keep an eye on gold price news.
The latest gold news for the first quarter of 2020 illustrates how popular this commodity actually was. As the World Gold Council said at the end of April: “The coronavirus outbreak, which swept the globe during the first quarter, was the single biggest factor influencing gold demand.” It’s reasonable to expect that we could see a reprise should cases spike again in the winter.
UBS Investment Bank analyst Joni Teves told CNBC at the start of May that he has an optimistic outlook for gold in 2020. In his view, the precious metal could rise to $1,790 per ounce in the near term – an upside of 3.88 per cent.
Another positive factor for gold price news lies in how fiat currencies are losing their appeal. Extensive stimulus packages from the US Federal Reserve and the Bank of England are driving dollars and pounds lower, and any recovery could be slow to say the least.
Other banks, such as Citi, believe that gold price news will calm down for the rest of the year, predicting an average of $1,715 in the second half of 2020. However, its analysts do believe that an average price of $1,925 is achievable in 2021 – an all-time high that surpasses the previous peak of $1,896.50 set in September 2011.
Long-term gold price outlook
Gold price news is going to be heavily influenced by when a vaccine is developed, how quickly this treatment is distributed worldwide, and the course of the economy’s recovery. A sudden “V-shaped” bounce back is deemed unlikely by many analysts, with indicators pointing to a slower “U-shaped” trend in the next couple of years.
The latest gold news focusing on long-term predictions comes from Incrementum, which attempts to look at how this commodity will perform in the coming decade. Their forecast is tremendously upbeat, with the authors writing: “The question is not whether the gold price will reach new all-time highs, but how high these will be. We are convinced that gold will prove to be a profitable investment over the course of this decade and will provide stability and security in any portfolio.”
Fast forwarding to 2030, Incrementum says a “conservative calibration” suggests $4,800 is achievable by the end of this decade. However, they added: “If money supply growth develops in a similar inflationary manner to that of the 1970s, gold price could be around $8,900 by 2030.” If that best-case scenario bears fruit, that would be an extraordinary 416 per cent rise from current levels.
In any case, Incrementum’s gold price outlook is clear.
Given the unique combination of circumstances, we are convinced that the 2020s will go down in investment history as a golden decade.
We will bring you the latest on gold news here on Currency.com as the economy increasingly reaches a crossroads.
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