Gold Outlook 2020

Risk appetite amid high uncertainty

As we look ahead, we expect that the interplay between market risk and economic growth will drive gold demand in 2020. In particular, we focus our attention to:

  • financial uncertainty and lower interest rates

  • weakening in global economic growth

  • gold price volatility.

In our new gold market outlook, we also explore the performance of gold implied by QaurumSM, our innovative valuation tool, across various hypothetical macroeconomic scenarios.

    Gold shone in 2019

    Gold had its best performance since 2010, rising by 18.4% in US dollar terms last year. It also outperformed major global bond and emerging market stock benchmarks in the same period (Chart 1). In addition, gold prices reached record highs in most major currencies except the US dollar and Swiss franc (see Table 2 in the Appendix). 

    Gold prices rose most between early June and early September as uncertainty increased and interest rates fell. But investors’ appetite for gold was apparent throughout the year, as seen by strong flows into gold-backed ETFs, growing gold reserves from central banks, and an increase in COMEX net longs positioning.  


    Gold Outlook Chart 1: Gold outperformed bonds and EM stocks

    Chart 1: Gold outperformed bonds and EM stocks

    Annual performance of major global assets *

    Sources: Bloomberg, ICE Benchmark Administration, World Gold Council; Disclaimer

    *As of 31 December 2019. Annual returns based on the LBMA Gold Price, Bloomberg Barclays US Treasury Index and Global Treasury Index ex US, ICE BAML US 3-month Tbill Index, Bloomberg Barclays US Corporate and High Yield Indices, MSCI EM Index, Bloomberg Commodity TR Index, MSCI EAFE Index, S&P 500 Indices, and Bloomberg Oil TR Index.


    High risks and low rates on the horizon

    We expect that many of the global dynamics seeded over the past few years will remain generally supportive for gold in 2020. 

    In particular, we believe that: 

    • Financial and geopolitical uncertainty combined with low interest rates will likely bolster gold investment demand
    • Net gold purchases by central banks will likely remain robust even if they are lower than the record highs seen in recent quarters
    • Momentum and speculative positioning may keep gold price volatility elevated
    • And while gold price volatility and expectations of weaker economic growth may result in softer consumer demand near term, structural economic reforms in India and China will support demand in the long term.

    Read the full commentary, analysis, and see hypothetical forecasts for gold performance in 2020 as implied by Qaurum based on a range of maco-economic scenarios developed by Oxford Economics in our new outlook, or try Qaurum to customise your own scenarios.


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