Market Overview

Global economic growth continues to be week despite some signs of recovery. The outlook for 2020 by OECD was recently trimmed to 2.9% with major world economies continue slowdown in a year to come.

Trade tensions between United States and China fueled by geopolitical risks retracting world trade. Central banks throughout the globe tend to lower interest rates or al least likely to maintain it at low levels. Government bonds such as US 10-year Treasuries as alternative safe heaven assets are underperforming inflation with low or even negative yields. 

While risks of a global downturn are still rattling world markets investors are searching an alternative low-risk instruments to park excessive savings.

Gold is respected as such alternative. In 2019 its spot price is up by 13.8% up to now. Major investment banks see gold prices further up for 2020. Goldman Sachs, UBS looking for prices to climb at $1,600 an ounce next year. Morgan Stanley targets $1,511/toz. as an average price for 2020. According to Reuters poll conducted mid-October median forecast spot gold will average $1,537 an ounce in 2020.

The World bank late October renewed its forecast for average gold spot price to $1,470 per ounce, up from $1,360.

So, a range of $1,500 to $1,600 an ounce is likely the target for bullion price next year.

Gold reached a historical record in 2011 at $1,920 per ounce as the Federal Reserve bought more than $2-trillion of debt to stimulate the US economy.

The gold options market today saw $1.75-million in block trades betting the precious metal could almost triple in more than a year, surpassing the record.

However, the bright forecast could be offset by US-China trade deal. If the deal is actually signed, the risks of further trade wars will recede sending bullion prices sideways.

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