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Gold overall bullish tone intact

Venkatraman S, Senior Research Analyst, Foretell Business Solutions

In 2019, gold traded in the region of $1266.1 and $1557.1/Oz

In 2019, the US Federal Open Market Committee (FOMC) has cut the key interest rate by 75 bps to a target range of 1.5-1.75 percent. The US economic growth is forecast to slow down further to 1.9 percent in 2020 as against the estimated growth of 2.3% and 2.9% seen in 2019 and 2018 respectively. In December 2019, US and China have formally agreed on Phase 1 of trade deal and the details will emerge after Jan 15th, 2020. We believe further thaw in US-China trade front and more deals are likely to be announced in phases in the coming months.    

The year of 2020 happens to be the US presidential election year. It remains to be seen whether Mr Trump will triumph once again. With slowdown in global economic growth, US election outcome and geo-political tensions may aid gold to consolidate its 2019 gains.

Gold has peaked out temporarily in the initial days of 2020 thanks to the standoff between US and Iran when it hits almost seven years high of $1611.35 per Oz on Jan 8th. The recent high is unlikely to be breached any time soon until unless something happens dramatically on the geo-political front. Gold is likely to retest $1445-1435 per Oz most probably in early Q2 of 2020 before it moves higher. One can anticipate gold price to touch as high as $1665-1690 per Oz during Q4 of 2020. In any case gold is unlikely to drop below $1400 per Oz and may trade in the broader region of $1400 and $1690 per Oz during 2020 and are likely to average $1504/Oz during 2020.

Summary for 2020: High-$1690 per Oz, Low-$1400 per Oz, Average $1504/Oz.  

Silver may see slight increase in prices in 2020

In 2019, silver traded in the region of $14.25 and $19.64/Oz. In 2020, Silver is unlikely to drop below $15.10/Oz. On the higher side silver is expected to trade towards $19.64-20.45/Oz. In 2020, silver prices are likely to average at $17.13/Oz. Silver industrial demand is on the rise, particularly in solar panels and electronics, may aid the prices to stay higher. Moreover, decline in Silver production is of a concern.       

Outlook for 2020: High: $20.45/Oz, Low: $15.10/Oz, Average: $17.13/Oz.

Disclaimer: Views are personal and not the views of the publisher.