Gold managed to trade back above $1,500 an ounce in afternoon dealings in New York on Wednesday, but a new report suggests that’s as good as it’s going to get.
Capital Economics in a note says all the drivers for the rally in the gold price – weakening global growth, safe haven demand and low interest rates – are now baked into the price.
The independent research house argues that gold will end the year around today’s levels and is set to drop by double digits in percentage terms in 2020 based on three factors:
Firstly, US Treasury yields are forecast to recover as “investors’ expectations for monetary easing are disappointed” and the increase in negative-yielding debt (now totalling some $16 trillion), particularly in Europe and Japan, is halted.
Capital Economics believes global economic growth will be soft next year, but is sanguine about the possibility of an outright recession “currently anticipated by the market.”
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