Main St. Bullish On Gold; One-Third See Prices Above $1,500 In 2019
Editor's Note: Kitco News has officially launched Outlook 2019 - Rush To Safety - the definitive reference for precious metals investors for the new year. We chose this year's theme as financial markets face growing uncertainty. With volatility on the rise, how do you protect yourself? Click here daily to see updated content.
(Kitco News) - Although down in 2018, gold will be ringing in the new year on a strong note as the market has seen a surge of upward momentum this past month, and Main Street investors expect that momentum to continue through 2019.
Kitco News’ annual gold price survey shows that retail investors are extremely bullish on gold in 2019. Nearly 5,000 people participated in Kitco’s online polls. The results show that 1,640 participants, or 34%, see gold prices pushing above $1,500 an ounce by the end of next year.
However, the bears haven’t completely disappeared as 18%, or 868 voters, see gold prices falling below $1,100 an ounce by the end of 2019. The bearish outlook garnered the second-highest number of votes in this year’s survey.
Only 7% of respondents, or 329 voters, see gold prices holding around current levels, just below $1,300 an ounce.
Bullish sentiment in gold is slightly down compared to the 2018 annual gold price survey. Last year more than 18,000 people participated in the Kitco’s online survey. Of those, 7,538 voters, or 40%, were extremely bullish, having expected prices to push above $1,400 by the end of this year.
Another 27%, or 5,038 voters, saw gold prices ending this year between $1,300 and $1,399.
Meanwhile, 22%, or 4,014 respondents, called for gold to end the year between $1,200 and $1,299.
Although the year isn’t quiet finished, February gold future prices last traded at $1,281 an ounce, down 2% for the year. However, December has been a positive month for gold with prices up nearly 4.5% for the month, its best monthly percentage gain since January 2017.
Main Street is significantly more bullish on gold compared to Wall Street analysts. According to outlook reports reviewed by Kitco News, most financial institutions expect gold prices to grind only modestly higher next year, with a lot of banks calling for an average price of around $1,300 an ounce.
In an interview with Kitco News earlier this month, KC Chang, precious metals analyst at IHS Markets, said that it will be difficult for gold prices to break its orbit around $1,300 an ounce unless inflation picks up significantly next year.
Bank of American Merrill Lynch and Dutch Bank ABN AMRO are the most bullish on gold in the new year, as both see gold prices hitting a high of $1,400 an ounce.
“We are moving into an environment that will be very supportive for gold,” said Michael Widmer, metals strategist at the Bank of American Merrill Lynch.
Although their base-case call is for gold prices to average 2019 around $1,300 an ounce, analysts at Citi said in their outlook that further equity-market weakness could push gold prices to $1,400 an ounce, as investors turn to safe-haven assets.
“The rising frequency of U.S. equity market drawdowns, the gradual unwind of QE [quantitative easing], higher overall macro market volatility, and elevated geopolitical risks should all continue to favor gold buying on the dips,” the analysts said.
The biggest bear on Wall Street is French bank BNP Paribas as the commodity team sees gold prices falling below $1,200 an ounce next year, averaging 2019 around $1,145 an ounce.