Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

LBMA’s Forecasters Are Modestly Bullish on Gold. And You?

Commodities / Gold & Silver 2019 Feb 05, 2019 - 04:19 PM GMT

By: Arkadiusz_Sieron

Commodities

The LBMA published its annual forecast survey for precious metals prices in 2019. Gold prices range from $1,150 to $1,475. Who is right?

Gold Prices Will Modestly Increase

As one year ago, the views of 30 precious market analysts in this year’s forecasts are strongly divergent. The average price of gold is projected to be $1,311.71 , so it is expected to be around the current level (when we write this Gold News Monitor, the price of gold amounts to $1,320.70). It implies a modest increase of 1.8 percent compared to the average price in the first half of January 2019 (when the forecasts have been done), and higher jump of 3.4 percent from the average price in 2018. However, the projected trading range for gold is between $1,150 and $1,475, or $325. So, prepare yourself for a really interesting year for the gold market!


There are wide spreads across other precious metals as well. In particular, the average price of palladium is forecasted to be $1,267.68. It implies a fall of 1.5 percent, but the figure is overshadowed by a $815 trading range (from $900 to 1,715). The spread suggests that 2019 might be turbulent for palladium. The analysts are more bullish on silver, forecasting a 4.2 percent increase in its average price to $16.28. However, it is platinum which is expected to be the best performing four metals. The experts project its average price to increase 5.1 percent to $850.71.

Bullish Case for Gold

The analysts formulated many arguments justifying their views, both bullish and bearish. Let’s list the most commonly presented, starting from the former group:

  • Fed’s more dovish stance of monetary policy,
  • Lower Treasury yields;
  • Weaker US dollar;
  • Stock market volatility;
  • The US economic cycle matures, pushing investors into safe-haven assets.

In short, more dovish US monetary policy, combining with maturing economic cycles and rising inflation and the risk of recession, should strengthen gold.

Bearish Case for Gold

Now, let’s turn to the bearish points:

  • Strong US economy;
  • The Fed’s more dovish stance will be short-lived;
  • The end of trade wars between China and the US will erases uncertainty and revive investment in risky assets;
  • Subdued inflation and positive real interest rates.

The bearish case can be summarized as follows: the US economy will continue its expansion and the Fed will resume its tightening in the second half of the year. As inflation will remain curbed, the real interest rates will increase. All the current downside risks, such as trade wars or Brexit, will recede.

Our Take on Gold Prices in 2019

We have just presented to you some bullish and bearish arguments made by several top experts. Which convince you more? When it comes to us, we believe that gold bulls have a stronger hand now. As we explained in the January edition of the Market Overview, a scaling back of Fed rate hike expectations should translate into weaker greenback and lower interest rates.

Please keep in mind that these macro factors are key drivers for the gold market and they were headwinds in 2018. But this year, they are likely to ease. In particular, a strong US dollar prevented rally in gold prices, despite otherwise positive macroeconomic environment. But the greenback might be peaking and running out of steam. Moreover, the ECB could start normalization of its monetary policy in the second half of 2019, or this is at least what investors could start to anticipate and price in. Such expectations should also push the dollar lower, while strengthening the gold prices.

To be clear, we are bullish at the margin. It means that we do believe that fundamental outlook for gold is better this year than in 2018. Actually, the LBMA’s forecasters might underestimate the gold’s upward potential. But it does not necessarily imply that we will see a sustained gold bull market. We rather expect assets rebalancing toward gold. You see, for the yellow metal to truly break out higher, we would need a serious economic slowdown in the US, or even downturn, and the FOMC would have to begin cut interest rates again.

Anyway, the recent gold price strength is encouraging (but investors should remember that January is consistently one of the best months for the yellow metal), and we remain fundamentally bullish. If our outlook changes, we will inform you immediately.

Thank you.

If you enjoyed the above analysis and would you like to know more about the link between the U.S. economy and the gold market, we invite you to read the August Market Overview report. If you're interested in the detailed price analysis and price projections with targets, we invite you to sign up for our Gold & Silver Trading Alerts . If you're not ready to subscribe at this time, we invite you to sign up for our gold newsletter and stay up-to-date with our latest free articles. It's free and you can unsubscribe anytime.

Arkadiusz Sieron

Sunshine Profits‘ Market Overview Editor

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Arkadiusz Sieron Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in