Bold call: gold prices to hit $2,000 in 2020 - City Index

Neils Christensen

Monday December 30, 2019 10:43


Kitco News


Editor's Note: 2020 is expected to be another year of significant uncertainty and turmoil. But the question is what asset will emerge the victor when the dust settles from the global trade war, Brexit, recession threats, negative bond yields. It's a showdown of global proportions, so don't miss all our exclusive coverage on how these factors could impact your 2020 investment decisions.

(Kitco News) - Gold is preparing to ring in the new year above the psychologically critical $1,500-an-ounce level and if this past year is any indication, gold’s fortunes will continue to favor the bold, according to one analyst.

As part of City Index’s bold prediction, technical analyst Fawad Razaqzada said that he is looking for gold to hit a new all-time high in 2020, with prices pushing to $2,000 an ounce.

Razaqzada said that his extremely bullish gold outlook comes as he expects to see global coordination among central banks to loosen monetary policy next year. He added that looser monetary policy will push bond yields further into negative territory, thereby “boosting the appeal of non-interest-bearing precious metals.”

Fawad Razaqzada, technical analyst at City Index

In a comment to Kitco News, Razaqzada said that even if gold doesn’t hit his bold target, he expects the precious metal to remain in an uptrend through 2020. “I think gold has everything going for it in 2020,” he added.

“Gold’s technical outlook remains bullish given that breakout in the summer from a 6-year-old consolidation at $1,350 and the subsequent bullish consolidation we have seen in recent months,” he said in a recent report. “So long as gold holds the breakout above $1350, the long-term technical bias would remain bullish.”

Razaqzada, said that the key to gold’s bullish outlook next year is the U.S. dollar and bond yields. He noted that his firm sees a mixed bag for the U.S. dollar index but is forecasting significantly lower bond yields in the new year. The real yield on U.S. 10-year bonds is looking to end the year at the lower end of its current range at 50 basis points, down more than 50% since the start of 2019.

“Bond yields are likely to remain depressed as global central banks try to combat slowing economic growth and subdued inflationary pressures with extraordinary loose monetary policy,” he said.

However, the spark that could kick the gold rally into a higher gear is a correction in equity markets. Gold has managed to push back above $1,500 as equity markets have pushed to new record levels. Many analysts have raised concerns about a correction in the equity market, which continues its longest bull run in history.

“If U.S. stocks were to correct themselves in 2020, then this surely could lead to elevated levels of safe-haven demand for gold,” said Razaqzada. “As the U.S. equity market bubble finally bursts, safe-haven demand could nudge gold past its 2011 peak of $1920, before tagging the $2,000 psychological hurdle.”

By Neils Christensen

For Kitco News