Gold is one of the most well established and mature markets around when it comes to investable assets. It has been an important commodity in the past, and it has its major uses in electronics and jewelry, but as a market, it is often seen as a great safe haven for a number of reasons.
The fact that gold works as a safe haven asset, one that often moves in anti- correlation to the traditional markets, means that the commodity is a great hedge against financial troubles, but it is also an asset that has shown steady and solid growth in value for a long time.
Gold is not an asset that is prone to big price swings, or high volatility, but it is known to almost constantly be growing as its uses and market desire keep growing. Also, the fact that Gold is an asset that is scarce, but with an uncertain supply, means the markets are often worth watching and forecasting gold prices for the next 10 years can often lead to positive gains over this long period of time.
Gold Price Forecast: for 2020 and beyond
Because gold has been seen as a valuable asset for thousands of years, it has always been desired and in demand, but it is in more recent history that the market has grown to be what it is today, and what it is today is a rather mature and stable market.
The Gold market is most commonly quoted in US Dollars (XAU/USD) and this market is known to move when both the dollar value falls, as well as when the stocks and bond markets are in decline. More than that, it thrives as a safe haven asset because it not only moves differently to the other markets, but it holds its value well, and grows gently.
Gold Prices Historical Overview
Historically, gold has been around since thousands of years as an important metal, but it wasn’t used for money until around 550 B.C. At first, people carried around gold or silver coins. If they found gold, they could get the government to make tradable coins out of it.
It played an important role through the Roman Empire where Emperor Augustus, who reigned in ancient Rome from 31 B.C. to 14 A.D., set the price of gold at 45 coins to the pound. In 1257, Great Britain set the price for an ounce of gold at 0.89 pounds.
But then, in the 1800s most countries printed paper currencies that were supported by their values in gold. This was known as the gold standard, but In 1971, US President Richard Nixon told the Fed to stop honoring the dollar’s value in gold and ended its primary use as a currency value and helped drive the asset to be more of a store of value.
This saw the price of gold start to take off as an ounce was with $40 dollars when depegged from the dollar, but in less than 10 years it rose to be worth $2,249 in relative wirth by 1980.
Gold price for today
Today, the gold price is in a good position having tipped a year high of over $1,700. Part of the reason for this growth spurt in the last few years has been the concern about an impending recession and the need for a safe haven asset, but the latest pandemic around the globe has also played its part and has made the financial markets full of fear and uncertainty.
Before the fear of the recession, gold was slightly left behind and made to feel unloved and needed in the last 10 years but this is mostly because it played a big role in 2008 when the last financial crisis struck, but as the economy recovered, the need for a safe haven asset fell away and the price of gold started dropping.
Factors that are affecting on gold price
Because gold is such a mature and established market, there are a number of factors that come into play when determining its price and how it is affected. Gold is also a rather unique asset compared to things like stocks and bonds, and that also makes it act differently and the fact that it operates as a hedge means one needs to look for factors that impact other assets differently.
A list of the factors to consider include: Consumption demand, Protection against volatility, Gold and inflation, Gold and interest rates, Good monsoon, Correlation with other asset classes, Geo political factors, Weakening dollar, Future gold demand.
Consumption demand has to do with the uses of gold as an asset removed from its market. Demand for gold keeps changing, and in recent times has been boosted as electronics manufacturers have seen the use of gold in their goods for conductivity.
Of course, gold is also consumed as jewelry, and there are big drives in demand even from global governments who seek out gold as a store of value that they keep in central banks.
As mentioned before, Gold is an asset that helps with protection against volatility. There is a demand for gold from people who are looking to protect themselves from volatility and uncertainty. Gold is a physical asset so it is able to be stored and kept by individuals, and its market moves differently from typical volatile markets so it is in demand for people hedging against uncertainty.
Underlining gold’s attraction as an asset for good times and bad, most investors would buy gold whether the domestic economy was growing or in recession.
Gold and inflation also work together as inflation is one way in which money can quickly devalue, and when this happens, people would rather have their money kept in something that would grow in value instead — like gold.
Therefore, in times when inflation remains high over a longer period, gold becomes a tool to hedge against inflationary conditions. This pushes gold prices forecast higher in the inflationary period.
In a similar way Gold and interest rates alo play their part in moving the price of gold as lower interest rates — which usually come about when there are times of financial uncertainty and governments want people to spend, means that saving is harder.
However, keeping gold means that the interest rate drops is kept away and the value of saving is maintained through the precious metal. In fact, according to some industry experts, under normal circumstances, there is a negative relationship between gold and interest rates.
Interestingly, there are instances that can impact the gold price from regional areas that are impacted by things like the weather. For example, India annually consumes 800-850 tonnes of gold and rural India accounts for 60 percent of the country’s gold consumption. Therefore, monsoon plays a big part in gold consumption because if the crop is good, then farmers buy gold from their earnings to create assets.
Because gold is also seen as a a highly effective portfolio diversifier due to its low to negative correlation with all major asset classes it is often picked up in times of uncertainty and this is why one of the factors to look out for is the relation between gold and the other asset classes feeling the pressure or the pleasure in the current financial circumstances.
Of course, gold is also used as a hedge in times of geopolitical uncertainty too as the asset provides a more stable value when there are looming crisis such as war. These geopolitical tensions also add pressure onto financial markets but help in boosting the demand and value of gold.
This also ties interestingly to how a weakening dollar leads to a stronger gold price. The dollar is very much linked to gold as it is primarily exchanged for dollars. But because of its negative correlation, when the dollar loses value — such as through inflation — then the gold price often goes up.
And finally, because gold is an uncertain supply that is mined, it is actually mostly recycled, so when the global demand rises, it is hard to meet supply, so demand heavily rises the price of the asset.
Gold Price predictions for 2020
The gold price prediction today, and the gold price forecast 2020 looks like it could be a really positive one, and it also comes off the back of a really good year in 2019 for the precious metal which had many geo-political factors impact its price and its growth in an upward trend.
Towards the end of 2019, the price of gold sat around $1,470 per Oz, and this growth came about for a number of reasons, but the most obvious of them being the possibility of an impending recession globally. The 2019 growth for gold sat at around 15 percent which is one of the biggest years for gold since 2010.
2020 is also expected to see more growth in line with what happened with 2019 as there is still geopolitical tension, especially considering the conflict between the US and China and their trade war, not to mention Brexit and the European Union. But we have also been heavily impacted by the Covid-19 pandemic which has put the world’s economy into a massive recession.
Already, in order to combat the impact of the virus on the global economy we have seen the Federal Reserve start to lower interest rates to very low positions. The policy of quantitative easing is in full swing in some of the world’s largest economies and this spells good news for Gold as saving is being disregarded when it comes to dollars, and a new medium for saving is needed — such as Gold.
More so, as explained above, gold is known to grow in value when the value of the dollar drops and the Fed has been clear that it is happy to inflict masses of inflation and dollar debasement to stimulate spending and increase liquidity through money printing.
For example, the Fed began expanding its balance sheet in 2009 after the financial crisis where it printed huge sums of money gold rose from $800 to $1200, having peaked at a record high of $1921 in September 2011.
Gold is likely to start exploding following the Covid-19 impact, but it’s bullish turn actually happened in June last year when the geo political turmoil took full hold.
Gold jumped nearly 8 percent in June, confirming a bullish breakout from the three-year-long sideways channel. The 5- and 10-month averages are trending north, indicating strong upward momentum.
Gold market analyst Gregor Horvat has looked into the Elliott Wave analysis if the technical analysis charts
“Gold made a sharp and impulsive move up in 2019, which was seen out of a wave B consolidation. The move was strong but it’s probably part of a corrective recovery if we respect a five-wave sell-off from 2011 highs. However, current recovery extends a little bit higher, but then it may find resistance in the 1st quarter or half of 2020, ideally around 61,8% Fibonacci retracement level, near 1600 area. That being said, be careful with Gold, because the market may see a strong sell-off in the second half of 2020, based on our Elliott Wave look,” he explained.
Gold Predictions for Future
Because gold is such a mature and well established market, and a rather settled and slow moving one, there are a lot of predictions that are made into the future for the precious metal. Of course, there are factors that need to be considered for long term gold price forecasts that are often unpredictable, such as the mining supply, or geo-political tensions. But, there are also a lot of factors that help drive gold, and these have been mostly driving the price up slowly over the years, such as currency inflation and the need for safe haven assets.
Gold Price Predictions for next 5 years (until 2025)
As has been explained above, the movement of gold is primarily upwards, but at a slow pace. That being said, the price of gold could rocket at this important juncture, and have lasting moves for the gold price predictions for next 5 years
A look at some of the gold forecast for the coming few years shows that the precious metal will indeed rise rapidly this year and could almost cross into the $2,000 per Oz range before hovering in the low $2,000 range until about 2025.
For example, one forecast sees 2020 looking like this:
But it then also predicts that the next four years may only move the price of the precious metal up by around 16 percent by January 2024.
Jeff Clark, Senior Analyst, GoldSilver, explains why it has never been a better time to own gold than now.
“The most important message from this analysis is that even if gold rises only modestly this year, or even takes a dip, it has rarely been more important to own. That means that dips in price should be bought, especially for anyone who doesn’t hold a meaningful amount. There are many factors, of course, that could impact the gold price in both the short and long term,” he said.
Gold Price Prediction for next 10 years (until 2030)
Looking even further ahead in the gold forecast, even the gold price prediction chart for the 10 years seems promising for the asset as the general gold prediction remains that its value will only go up especially considering there is a financial crisis looming and we can see what happened in the 10 years following 2008.
Dohmen Capital Research sees a good recent example is the 2008 global crisis. Gold plunged 31 percent as credit tightened, the crisis accelerated and a rush to cash from all assets commenced. That was painful for bulls who didn’t know that a credit crisis causes all assets to plunge. But it also created a great buying opportunity at the bottom.
Below is a chart of the gold ETF during that time:
This crisis, as is happening already in 2020, caused the central banks to step up their money printing, which then makes gold a great investment. That bull market in gold went from late 2008 to late 2011. But, there was a dip in interest after that, but even still, the longer position is still very promising as a look at a 20-year chart below which shows the “non-commercial” short positions. These are the speculators who are usually wrong at the important turns.
The fact that speculators, i.e. non-commercials, had record short positions in 2018 confirms that a lot of short covering may occur, to be followed by actual buying. That would mean greater demand.
Why is the gold price increasing?
Currently, the gold price is increasing because there is a clear need for a safe haven investment,enet. We have seen Federal rate cuts, and the stock markets tanking. This has seen investors look to move their money into more secure investments, and gold is one of the best such investments.
Is it the right time to buy gold?
Now is probably one of the best times to buy gold. It has been ona bullish run for almost a year but instead of turning around it is expected to accelerate because of the fall out of the Covid-19 pandemic.
What would be the gold price in 2020?
Having already grown by a few hundred dollars in the first quarter of the year, it is expected that gold’s price will grow even quicker for the next few quarters. There is every chance it will get close to $2,000 an Oz, but probably fall just short of that resistance level.
What will be the price of gold in 2030?
But 2030, the price of gold will likely be a lot higher than where it is today as the Covid-19 recession will help spike its price. The price may fall back a little from there but more than likely other factors will help grow it again by the time the next decade comes around
What was the highest gold price in history?
The all-time high value of gold in USD terms is $1895 per ounce, reached in 2011.
Summary: What is the future of the gold
In the world of investing, there is of course always going to be risk and potential for loss. Gold is no different, but it is also one of the least risky investments that there is. It is an asset that will always be in demand, either for its uses in Jewelry, or electronics, and it is also in demand from central banks as well as investors.
Gold is also a resource that has an uncertain, but scarce, supply. This supply is also always dwindling which means the demand will keep rising along with the price. More so, the factors that impact the future gold’s price prediction are only going to get more relevant with the Covid-19 crisis and the ongoing need for a safe haven asset.
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The information provided above does not amount to trading advice and comes from a variety of different sources. Should you choose to invest in gold, do so at your own risk.