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Main Street bullish on gold in 2020; 25% see prices above $2,000

Kitco News

(Kitco News) - The gold market is starting the new year on solid footing as geopolitical uncertainty drives safe-haven demand, pushing prices to a four-month high.

And if sentiment within the retail sector is any indication, the gold market could see continued strength through 2020.

In this week’s outlook survey, Main Street investors were asked where they see prices ending the year. The results show that only a handful of investors see any downside in gold in 2020. A total of 1,749 people participated in Kitco News’s outlook survey and 80% of participants said they see gold prices ending the year at least above $1,600 an ounce.

One-quarter, or 439 Main Street participants, were extremely bullish on gold, saying that they expect the yellow metal to push above $2,000 an ounce by this time next year.

On the down side, less than 9% of voters, or 152 participants saw gold prices ending the year below current prices. Less than 1% forecasted gold prices to fall below $1,000 an ounce.

Main Street’s bullish outlook comes as gold saw a nearly 19% rally to $1,523.10 an ounce in 2019 as loose monetary policy around the world, coupled with acute recession fears boosted investment demand to unprecedented levels.

While gold’s rally, which started early in the summer and quickly pushed prices to a six-year high, surprised some Wall Street analysts, it was actually the expected outcome for Main Street.

Last year in Kitco News’ 2019 price outlook survey, nearly one-third of all voters 1,640 participants, looked for prices to push above $1,500 an ounce.

Although Wall Street analysts are expecting gold prices to continue to rally through 2020, sentiment is not as strong compared to Main Street. Many international banks like Goldman Sachs, ABN AMRO, TD Securities and see gold prices rising to around $1,600 an ounce.

When combined with 750 tonnes of central bank gold purchases related to de-dollarization and defensive portfolio rotations, the savings glut means we maintain our bullish gold stance in 2020 with a target of $1600/toz.,” analysts at Goldman Sachs said in their outlook report published in late-November.
Although the Federal Reserve is expected to hold interest at their current levels, many analysts have noted that at these low levels it wouldn’t take much inflation to drive real interest rates lower, improving gold’s opportunity costs at a non-yielding asset.

Analysts also noted that in a low interest rate environment, bonds aren’t able to provide the same kind of safety they are known for. For many investors, gold is now playing the important insurance role in a portfolio.

“The risk profile for investors continues to change and the bottom line is that in 2020 investors are going to need a hedge and more and more of them are looking at gold as liquid alternative asset,” said Juan Carlos Artigas, director of investment research at the World Gold Council in a recent interview with Kitco News.

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.