The prospect of a further increase in FED interest rates this year, strong US dollar and stock market boom led to a 10% depreciation of the price of gold from its April high. Even though short-term prospects cause uncertainty about a further development, analysts agree that the price of gold will experience a slight rise next year – above 1340 USD per troy ounce.
The Wednesday fall of the US dollar index (DXY) from its almost 16month high supported the price of gold which rose by 1.7 % yesterday. The US dollar has been strengthening in the recent months not only thanks to the positive development on the American labour market and a further increase in FED interest rates but also – perhaps slightly surprisingly – thanks to a fear of a possible trade war. Investors perceived dollar as a safe asset. Analysts from Capital Economics believe that these circumstances should slow down the growth of the price of gold next year, but they expect the high to reach 1400 USD per troy ounce in 2020. JP Morgan analysts expect a slight increase to 1295 USD per troy ounce before the end of this year. In 2019, they expect a further increase up to 1340 USD per troy ounce. A team of analysts from Goldman Sachs expects a similar development. They believe the price of gold shouldn’t drop below its support level of 1200 USD and it should reach 1375 USD next year.
Potential correction on global stock markets, a drop of macroeconomic indicators in China and, primarily, indicating the end of the current cycle of increase in FED interest rates could, according to analysts, lead to a substantial rise and confirmation of a long-term growth trend.
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