Make Kitco Your Homepage

Gold To Move Higher In 2019, But Don’t Expect Fireworks - Metals Focus

Kitco News

(Kitco News) - Gold prices are expected to quietly move higher through the rest of the year and into 2019, but investors shouldn’t expect to see fireworks as there currently isn’t an urgency for diversification, said one of the world’s top precious metals consultancy firms.

In a recent interview with Kitco News, Philip Newman, director and founding partner of Metals Focus, said that although they remain optimistic about the precious metals, his firm doesn’t expect an easy road ahead for investors.

Philip Newman, director and founding partner of Metals Focus

Newman said that Metals Focus sees gold pushing back into the mid-$1,300 an ounce area next year, with prices averaging around $1,300 an ounce in 2019.

“Gold doesn’t look particularly exciting, but the market will grind higher and we think this the start of a new year’s long uptrend. Investors will gradually move back into the market,” he said.

Newman said that the majority of general investors had stayed away from gold because of their confidence in the U.S. economy, which is pushing interest rates and the U.S. dollar higher; investors also remain relatively optimistic about U.S. equity markets. However, he added that momentum could start to shift in 2019.

“For 2019, we expect the U.S. economy will gradually run out of steam and that will turn the Federal Reserve more dovish, which will weaken the U.S. dollar. In a slowing economy, we see a plateau in equity markets and that will lead some investors to pay more attention to gold. We don’t see a wholesale rush into gold, but it will be enough to push prices higher.”

Newman said that once sentiment in the marketplace shifts, it won’t take much to drive gold prices higher. However, Newman added that Metals Focus’s scenario reflects long-term strength in the marketplace.

“The last thing the gold market needs is a rush of new money that creates bubble conditions that is unsustainable,” he said. “A fast run-up in prices is not just damaging for investors but also for industrial clients.”

Although some investors have been disappointed with gold’s uninspiring price action, Newman said that he thinks the market has held up reasonably well in a challenging environment.

“It’s no mean feat that gold is at $1,200 while the market is faced with record short positions, interest rates moving higher and a strong U.S. dollar,” he said.

Comex December gold futures last traded at $1,202 an ounce, down 0.12% on the day.

Although Metals Focus is modestly positive on gold, it is significantly more bullish on palladium. He noted that growing supply and demand imbalance will continue to drive prices higher.

“Palladium has the best fundamentals; it has the strongest demand profile compared to all the other precious metals,” he said. “We see palladium having a much more volatile uptrend than all the other precious metals.”

December Palladium futures last traded at $1,096 an ounce, up almost 1% on the day.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.