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Natixis downgrades 2020 gold outlook: Prices to average $1,370

Kitco News

(Kitco News) - Next year could prove to be a difficult one for gold prices, according to one French bank, which doesn t see much upside for the yellow metal.

Bernard Dahdah, precious metals analyst at Natixis, said in a report Friday that he is downgrading his gold outlook for next year. He said that he sees the yellow metal averaging the year around $1,370 an ounce, down from its previous average forecast of $1,420 an ounce.

This reflects a more positive outlook on the U.S. economy and our expectations that the current Fed rate cut cycle has concluded,” he said.

The latest gross domestic product numbers for the third quarter, released earlier in the week, is an example of the resilience in the U.S. economy and one of the reasons for the bank s downgrade, Dahdah said.

Looking forward, the risk for growth in the U.S. is on the upside,” he said.

Better-than-expected economic data has also impacted interest rate expectations as markets cut back on calls for further rate cuts. The CME FedWatch Tool shows that markets are pricing in less than a 50% chance of a cut in June and only see a roughly 50% chance of one cut by the end of next year.

Dahdah also pointed to weak consumer demand in India and China as a limiting factor for the gold market.

The comments come as gold struggles to find momentum as it holds critical support above $1,450 an ounce. February gold futures last traded at $1,467.60 an ounce, up 0.47% on the day.

Although Dahdah is not very optimistic on gold prices next year, he added that $12.5 trillion in negative yielding debt should provide a solid floor for prices next year.

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