Gold prices to trade between $1,600 and $1,700 in 2020 – Aberdeen Standard Investments
(Kitco News) - Higher gold prices are here to stay as investors embrace the precious metal in a new era of low interest rates and market uncertainty, according to one market strategist.
Although investor optimism has improved as recession fears have abated in the last few months of 2019, Steve Dunn, head of exchange-traded products at Aberdeen Standard Investments, said that there is still strong fundamental support to push gold prices higher in 2020.
In an interview with Kitco News, Dunn said that gold prices could push as high as $1,700 an ounce by the end of next year as there is still enough geopolitical uncertainty for gold to continue attract safe-haven demand.
“With equities at record highs, many investors are starting to question how long this bull run will last,” he said. “We are definitely seeing more appetite for gold as an insurance purpose.”
2019 was an unprecedented year for Aberdeen Standard Investments as its exchange-traded-product (NYSE: SGOL) saw inflows valued at $95 million.
Not only do investors face continued financial market uncertainty, but Dunn noted that because interest rates are so low, they don ’t offer the same level of protection compared to previous years.
“The fundamentals are in place for higher gold prices in 2020. All it needs is a spark to ignite the new rally,” he said.
Although trade tensions between the U.S. and China have eased, Dunn said that this will still be an ongoing issue in 2020. He added that the phase one agreement recently proposed is “underwhelming.”
As for potential headwinds for gold, Dunn said that the lack of inflation could weigh on the precious metal next year.
“Right now, we are seeing pockets of inflation but if you look at the economy as a whole, you will have a difficult time making an argument that inflation is out there,” he said. “For gold, if price are going to be sustainable at $1,700 or $1,800, then you are going to need to see persistent inflation.”
While Dunn is bullish on gold, there is another precious metal that he is keeping an eye on: silver.
“When at valuations in the precious metals space, I think you need to pay attention to silver,” he said. “If we don ’t see a recession in 2020 then I think silver prices could push higher on renewed industrial demand.”
Dunn said that he sees silver prices pushing to $18 to $18.50 an ounce by the end of 2020.
Looking at other precious metals, Dunn said that palladium continues to look good as the market faces growing demand and shrinking supply.