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Gold looks set to end the year with double-digit gains and is likely to maintain its upward trajectory in 2020.
At press time, the yellow metal is trading at $1 477 per Oz, representing 15,25percent gains on a year-to-date basis. Anything above 13,2percent would be the biggest yearly gain since 2010 when prices had rallied by 29,6percent.
Trade war, recession fears and dovish Fed pushed gold price higher in 2019
The year gone by will be remembered for the US – China trade war escalation, persistent recession fears and more importantly, for the US Federal Reserve’s remarkable dovish U-turn.
The Fed had raised rates by 25 basis points in December 2018 and pencilled in two rate hikes for 2019. However, the central bank reversed course in the first quarter and officially confirmed rate hike pause. The metal gained just 0,76 percent in the first quarter, as the rate hike pause was already priced in the last quarter of 2018, but picked up a strong bid and rose 9 percent in the April to June period with markets increasingly betting on rate cuts.
The Fed reduced borrowing costs by 25 basis points in July — the first rate cut since 2008 — and announced quarter-point reductions in September and October. As a result, gold eked out 4,48percent gains in the third quarter.
Apart from the Fed’s dovish turn, the metal also drew haven bids, courtesy of the US-China trade war and the resulting fears of recession in the world’s two biggest economies. — Reuters.
Online Reporter