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Gold hits all time high in Australian dollars

Topics [ gold analysis gold prices gold bullion prices ]

Gold continued to rally last week, with the price in United States Dollars at one point surging beyond USD 1,350oz. In Australian dollars, it hit a new all-time high above AUD 1,950oz, continuing a strong upward trend that has been in play since late April this year.

The table below shows the price of gold and silver (in both AUD and USD), as well as the performance of the S&P500 and the ASX 200 over the past week, month and year. It shows gold outperformed equity markets, though silver lagged.

The rally in gold has been driven by a handful of factors which include - 

 • A continued plunge in global bond yields, with US 10 year bond yields now sitting at just above 2%. Since late 2018, the market value of debt trading with a negative yield has almost doubled and currently sits at approximately USD 12 trillion, according to a 17 June article published in The Financial Times. 

 • Expectations of monetary easing by the US Federal Reserve (Fed). Some economists see the Fed cutting interest rates as soon as July 2019, with PIMCO, the world’s largest bond fund manager, suggesting the Fed might cut rates by 0.50% if “tensions between the US and China are not at least scaled down before or during the G20 meeting in late June”.

 • Escalating geopolitical tensions in the Middle East, with two oil tankers attacked in the Gulf of Oman last week.

Australian dollar investors in gold have also received a boost from continued weakness in the local currency, which is back below USD 0.69. Markets are now pricing in at least two more interest rate cuts by the Reserve Bank of Australia (RBA) over the next year.

If the RBA delivers what the market expects, we may see added demand for precious metals, especially if it’s accompanied by continued media speculation about the potential for quantitative easing (increasing the money supply) in Australia.

High Profile Investors Turning to Gold

Given the recent rally in gold, it is no surprise to see it find favour among high profile investors. Stephen Innes, Head of Trading and Market Strategy for Vanguard Markets, stated in an article published on 17 June: “Gold is reclaiming its rightful status as a must-have safe haven asset in everyone’s investment portfolio”.

Innes went on to state that he is “unwaveringly bullish on gold and continues to buy as it remains one of my highest conviction trades into 2020.”

DoubleLine Capital’s Jeffrey Gundlach, known in financial markets as the “Bond King” stated he was long gold in an investor webcast last week. He noted that he expected the US dollar to fall between now and the end of 2019, while he also sees a greater than 50% chance the US will enter recession within one year.

Finally, billionaire Paul Tudor Jones, fund manager and founder of Tudor Investment Corporation has said gold is his favourite trade for the next 12-24 months. In an interview with Bloomberg last week, Jones noted that gold has “everything going for it” and that if the price can push through USD 1,400oz, it will get to USD 1,700oz “rather quickly”.

Of course, it must be said that prices aren’t guaranteed to rise and after a 5% rise over the past month, some consolidation would not be unexpected. Nevertheless, we remain optimistic about the medium to long-term outlook for gold. We believe it should be on the radar of most investors given its unique qualities and the benefits it can bring to well diversified investment portfolios.


Sources:

Gundlach Quote

https://www.cnbc.com/2019/06/13/bond-king-jeffrey-gundlach-i-am-certainly-long-gold.html

Tudor-Jones Quote

https://www.kitco.com/news/2019-06-12/Gold-Price-Going-To-1-700-Soon-Says-Billionaire-Paul-Tudor-Jones-Bloomberg.html

https://www.youtube.com/watch?v=iNjOptP7jJ4

Negative Yielding Debt

https://www.ft.com/content/cf39a9a4-8ea2-11e9-a24d-b42f641eca37

Stephen Innes

https://www.fxstreet.com/analysis/gold-fever-is-spreading-201906170714

Disclaimer

Past performance does not guarantee future results.

The information in this article and the links provided are for general information only and should not be taken as constituting professional advice from The Perth Mint. The Perth Mint is not a financial adviser. You should consider seeking independent financial advice to check how the information in this article relates to your unique circumstances. All data, including prices, quotes, valuations and statistics included have been obtained from sources The Perth Mint deems to be reliable, but we do not guarantee their accuracy or completeness. The Perth Mint is not liable for any loss caused, whether due to negligence or otherwise, arising from the use of, or reliance on, the information provided directly or indirectly, by use of this article.



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LBMA precious metal price prediction survey for 2019

Topics [ gold bullion prices ]

Reflecting the views of 30 professional analysts, the London Bullion Market Exchange’s forecast survey for the price of precious metals in 2019 is out!

The annual report asks participants to predict the high, low and average price of gold and other investment metals for the forthcoming 12 months.

The average of all forecasts for gold suggest a modest gain, up 1.8% to $1,311.71. Analysts’ estimates vary considerably across a $325 trading range, with a high of $1,475 and a low of $1,150.

On silver, participants foresee an average price per ounce of $16.28 in 2019. With a high of $20 and a low of $12.75, the $7.25 spread is also seen as significant.

The lack of consensus about what may happen to prices reflects divergent outlooks on what’s in store for the global economy, the LBMA suggests.

“Whilst markets have factored in some of the downside risks of Brexit and US-China trade wars, other factors such the level of US real interest rates, strength/weakness of the dollar, the likely impact of geopolitical factors and the pace of global economic growth continues to provide some uncertainty,” it says.

Commentaries from each contributor in support of their price predictions including platinum and palladium make fascinating reading in the 2019 Precious Metals Forecast Survey [pdf], where you can also discover who made the most accurate forecasts this time last year.

Prices in US dollars.



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LBMA forecasters split on price of gold in 2018

Topics [ silver bullion prices gold bullion prices ]

The London Bullion Market Exchange’s latest Precious Metals Forecast Survey has split analysts on the likely direction of precious metals in 2018.

The annual forecast brings together a group of experts to predict the high, low and average price of gold, silver, platinum and palladium during each 12-month period.

This year 34 participants were asked for their views. Notable factors that divided the group’s projections included the level of U.S. real interest rates, the likely impact of geopolitical factors and the pace of global economic growth.

For gold, the different opinions prompted forecasts in a trading range of US$390 – from a low of US$1,120 per ounce to a high of US$1,510 per ounce.

With similar divergences in the other estimates, including a silver low of US$14 rising to a high of US$23, the LBMA said we could be in for “a dramatic year in precious metals”.

The extremes at either end of the forecast, however, effectively cancelled each other out with average price predictions for each metal in 2018 little different from those actually seen in the first half of January.

If the combined wisdom plays out, the average price of gold across 2018 would be US$1,318, with silver averaging at US$17.81.

In the 2017 forecast survey analysts predicted that the average gold price for the year would be US$1,244. As it transpired, they were just 1% out with actual average price of US$1,257.

Read the full survey and what the individual analysts had to say about precious metals prices in 2018.


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‘Brexit’ fuels demand for gold

Topics [ gold market invest in gold gold bullion prices ]

NEWS

 

‘Brexit’ is shorthand for the possibility of a British exit from the European Union following a UK referendum on 23 June 2016.

Extremely close, the most recent opinion polls show the possibility of the Brexit camp coming from behind to snatch what was until recently thought to be an unlikely victory.

With worries that the 28-member EU could consequently begin to unravel, equity markets are gripped by uncertainty. In the past four days, the UK’s FTSE100 stock index has recorded losses of £100 billion.

Fuelled by fears for the British economy, some investors are turning to gold in an effort to protect their wealth. One major gold dealer in the UK has reported it is already experiencing increased sales, and is forecasting a huge rush for gold if the leave campaign is successful.

Turmoil in Europe, like the earlier possibility of Greece’s exit (Grexit), is likely to be contagious. Being an economic powerhouse, the impact of a British exit will have far greater ramifications than Greece’s prior exit threat. Among global equity markets turning sharply lower on Tuesday, the ASX lost over 2% as nervous investors dumped shares for less risky bonds and gold.

With the rhetoric heating up between the pro and anti-European campaigners in Britain this week, experts are broadly in agreement that the price of gold will climb further. Should voters confirm a Brexit in eight days time, the possibility of further slides in equities and declining world trade would only further strengthen its safe haven appeal.

If, on the other hand, those who wish to stay in the EU, led by Prime Minister David Cameron, are successful, plenty of risk factors with potential to damage world financial markets remain.

Along with other risk factors including worries about the underlying strength of China’s economy and the possibility of a Trump presidency, the allure of gold only gets brighter.

Brexit



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Returns Matrix Demonstrates Gold Is For The Long Term

Topics [ gold bull market gold bear market gold bullion prices ]

RESEARCH AND ANALYSIS

Discover the return on a gold investment over a range of timeframes in this Returns Matrix for Gold created by Bron Suchecki. Click to learn how.




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2015 LBMA Forecast Survey Published

Topics [ gold bullion prices ]

RESEARCH AND ANALYSIS

Click here for the full pdf version of the 2015 LBMA Forecast Survey, which includes supporting commentaries from a record 35 analysts on expected price outcomes for gold, silver, platinum and palladium.



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