Slowing global economic growth and geopolitical tensions will force the Fed to cut interest rates further in 2020, raising the price of gold to $1650 an ounce next year, according to Dow Securities (TD Securities).
Dow Securities is bullish on gold all year round. In its latest forecast, TD Securities expects gold to be $1550 in the first quarter of 2020, $1575 in the second quarter, $1625 in the third quarter and $1650 in the fourth quarter.
The global economy is slowing, dragged down by trade and recent austerity, with Germany just 1/4 short of a technical recession, according to Dow Securities commodities strategists. It is also possible that, after exceeding expectations since the end of June, we are likely to reach the highest local level because the market may have adjusted too positively to expectations, and we should now be disappointed with the data.
The two strategists also said slowing economic growth and geopolitical tensions could lead to a more moderate interest rate cut by 2020. The turmoil in the short-term repo market prompted the Fed to inject more than $140 billion worth of liquidity into the market and promised to inject more.
Strategists at the Bank of England advise ignoring rumors that have received media attention and focusing on long-term fundamentals, which can lead to higher gold prices. About $15 trillion worth of investment-grade notes yield negative, and U. S. interest rates are under downward pressure as investors actively seek yields.
Dow Securities pointed out that towards the end of the year and 2020, the market risk appetite will also weaken. The risk of another "earnings recession" like 2015-2016 is rising.