Gold prices look to end the year more than 15% higher, on track to post their biggest annual gainer in 9 years.
“Gold has seen considerable safe haven buying from investors concerned over low and negative yields in the bond market and fearing a possible downturn in equities,” said the chief gold strategist at State Street Global Advisors. Gold exchange-traded funds have also been “feeling the benefit of strategic asset allocation type buying by institutions and individuals.”
“Ongoing uncertainties, both macroeconomic and geopolitical have provided support for both types of buying,” he said.
On Monday, gold futures settled at 1,480.50 oz, with prices based on the most-active contract up 15% YTD. That would make the largest yearly rise since Y 2010, when prices climbed by nearly 30%, according to FactSet data.
Silver rose 0.1% to 17.04 oz, while Platinum was unchanged at 928.93.
Gold price moved to the upper band of the trading range that had been in existence for 6 years, since the Spring of Y 2013.
Helped by Fed Chairman Powell saying in June that he would “make a mid-cycle adjustment and give the markets the interest rate cut they had been clamoring for.”
Gold rapidly rose to over 1,550 oz by September.
Gold futures prices peaked this year at 1,560.40 on 4 September the highest settlement since April 2013.
After cutting interest rates 3X this year, the Fed on 11 December held its benchmark interest rate steady at a range of 1.5% and 1.75%.
Gold has given up some gains in the wake of the latest policy announced, but it has done very well from a larger time perspective.
In the decade from early Ys 2001 to late 2010, prices for the precious Yellow metal climbed from 250 to 1,250 oz, for an average gainer of $100 per year.
Next year gold may face some challenges.
A more stable global economic regime, with or without a trade deal, would also undermine safe-haven demand for the precious Yellow metal.
So a further gain in gold would likely require additional interest rate cuts and rising supply of negative interest rate bonds around the world.
When I look out into the next decade it is possible for gold to see similar moves to the 1’s seen in the past decade.
The speculative participants will not again want to risk missing the 1st 10 years of a Bull market in gold.