Gold scores highest finish since late September - MarketWatch

Gold scores highest finish since late September - MarketWatch

Gold prices rose for a seventh straight session on Thursday to finish at their highest in more than three months, unfazed by strength in the U.S. stock market and the dollar after the precious metal scored its biggest one-year advance since 2010.

“You can’t count out gold with higher stocks and [a] firm dollar as [a] global slowdown is moving central banks” toward accommodative monetary policies, said George Gero, managing director at RBC Wealth Management, in a daily update.

On Wednesday, the People’s Bank of China said it would reduce the portion of deposits commercial banks are required to set aside as reserves, releasing billions of dollars to the financial system to help boost economic growth.

Gold for February delivery on Comex GCG20, +0.49%  rose $5, or 0.3%, to settle at $1,528.10 an ounce. That was the highest finish for a most-active contract since Sept. 24, and the seven-session rise was the longest such streak of gains since the one ended June 7, according to FactSet data.

March silver SIH20, +0.86%, meanwhile, gained 12.5 cents, or 0.7%, to $18.046 an ounce, after a 0.4% loss on Tuesday, the last trading day before the New Year’s Day holiday Wednesday.

Read Barron’s story: Gold prices could climb to another record high in 2020

Gold rose 18.9% in 2019, its biggest annual rise since a 29.7% jump in 2010. Silver rose 15.5% in 2019, its biggest calendar-year percentage gain since 2016.

Gold prices, which had consolidated in the fall after a strong run-up earlier in 2019, regained momentum in the final leg of 2019, pushing back above $1,500 an ounce.

And the rally is likely not over yet, according to Christopher Louney, commodity strategist at RBC Capital Markets.

“As we look out through 2020 and 2021, we are of the view that while not all quarters will prove particularly encouraging, at the end of the day, higher prices will likely win out [year on year] in annual average terms,” he wrote in a research note dated Thursday. “Our view is based on the observed shift in attitude towards gold, improved sentiment, and persistence of uncertainty that pervades throughout our forecast horizon.”

From a technical perspective, the seeds of the recent gains were sown after gold “left behind the low volatility compression band that held prices between $1,450 and 1,480 for almost two months, giving a clear directional signal,” said Carlo Alberto De Casa, chief analyst at ActivTrades, in a note.

“Moreover, traditionally the first part of the year has often provided positive seasonality for gold. Now it seems that investors are trying to anticipate this movement and it has now moved into the final part of the year. The slowing down of the greenback is another positive element for gold as the dollar is negatively correlated with bullion,” he said.

In other metals trade, April platinum PLJ20, +0.63%  rose $7.20 an ounce, or 0.7%, to $985 an ounce, while March palladium PAH20, +0.91%  added $18.70, or 1%, to $1,928 an ounce.

March copper HGH20, +0.80%  rose 2.8 cents, or 1%, at $2.825 a pound.

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2020-01-02 19:14:00Z
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The Price of Gold Could Hit a New Record High in 2020 - Barron's

The Price of Gold Could Hit a New Record High in 2020 - Barron's

Collectively, central banks have purchased an average of more than 500 metric tons of the yellow metal each year from 2011 through 2018. Photograph by Juan Barreto/AFP/Getty Images

Investors who didn’t own gold in 2019 could be kicking themselves after an 18% rise in prices for the year. But it might not be too late to join the rally.

Some gold bulls even see the price of bullion breaking the record high set in 2011, when it briefly topped $1,900, roughly 25% higher than current levels. Robust buying by central banks, a weakening of the U.S. dollar, and growing political tensions could combine to fuel further gains.

“If we think about it in percentage terms, to imagine gold making a new all-time high sometime in 2020 doesn’t seem like such a stretch,” says John Roque, a technical analyst with Wolfe Research in New York City.

Roque and his colleagues see a repeat of historical chart patterns in bullion prices playing out. “We believe gold will (a) break out above resistance at $1,557, (b) work to $1,650, and then (c) make a new all-time high,” says a recent Wolfe Research report. An ounce of gold recently fetched $1,515, according to the London Bullion Market Association, a trade group.

Other investment firms see higher prices. Swiss bank UBS has a base-case scenario of $1,600. New York-based commodities consulting company CPM Group and asset-management company State Street Global Advisors see potential highs of $1,600 and $1,650.

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Investors looking to capitalize on the likely continued rally should consider buying the SPDR Gold Shares exchange-traded fund (ticker; GLD), which holds bars of solid bullion. Alternatively, try purchasing active-month gold futures contracts on the CME.

A big part of the bulls’ case is that buying by central banks will continue to absorb a lot of the metal. Collectively, central banks have purchased an average of more than 500 metric tons of the metal each year from 2011 through 2018, according to World Gold Council data.

Initial data suggests a similar pace for 2019. Better still, the trend looks set to continue in 2020, says George Milling-Stanley, chief gold strategist at State Street. Central banks “feel they are seriously overweight in dollar assets,” he says.

The U.S. election, trade tensions between the U.S. and China, and the pending impeachment trial of President Donald Trump could also act as catalysts for movements in the price of gold.

“There will be a lot of volatility in markets ahead of the elections, and that will be helpful for gold,” says Rohit Savant, director of research at CPM Group.

A decline in the value of the dollar would bolster gold prices, notes David Ranson, director of research at financial analytics company HCWE & Co.

And Trump has repeatedly suggested that the dollar should be cheaper to help exports. Gold is priced in dollars.

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“Once the dollar becomes unstable in a downward direction, the process tends to continue,” Ranson says.

An analysis of weekly price data showed a minus 0.62 correlation between the dollar index and the price of gold over the decade through Dec. 23.

Investing in gold carries risks. It doesn’t provide investors with dividends, and the market is relatively thin compared with that of large stock funds like the SPDR S&P 500. That can make prices volatile. In other words, don’t be surprised if the gold market gives you a wild ride.

For now, however, the path for gold prices looks to be headed upward.

Write to Simon Constable at reports@wsj.com

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2020-01-02 14:01:00Z
https://www.barrons.com/articles/the-price-of-gold-could-hit-a-new-record-high-in-2020-51577964603
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