By Abdul Basit

Sophisticated and smart investors who fathom history and economics have always taken the position in real estate and gold, said Shan Saeed, Global Chief Economist for Juwai IQI.

Gold has taken a major position and remains in the asset portfolio of many investors in 2020. gold has appreciated 17.18% YTD and will outperform other precious metals in 2020.

“Gold will be trading between $2,200 and $2,500/ oz next year taking into account many exogenous variables like central bank buying, QE4, stimulus and negative interest rates, US election, topsy-turvy market performance and struggling Europe,” Shan Saeed told The UAE News.

Gold is the only asset class with zero counterparty risk. The current bull market in gold has commenced, which is the third time in the yellow metal history. If we check the history and can get guidance from there.

This is the third bull run in the gold market. The first bull-run started from 1971 to 1980, and prices increased by 2,328% from $35 to $850/oz. Second bull-run started in 2001 to 2011, and prices increased by 648% from $257 to $1,923/oz. “Now we are in the third bull-run which started in 2015 to-date and prices have gone by 63.45% from $1,089 to $1,780/oz. The market is still on the upsurge and has demonstrated that the macro environment for gold is very favourable for the next 2-3 years,” he said.

Few predictions from global banks and market intelligence report for gold price in 2020 are Goldman Sachs predicts $2,000 per ounce, Bank of America forecasts $3,000/ounce, Juwai IQI predicts 2,500/ounce, Credit Suisse 2,000/ounce, and UBS 1,850/ounce.

WHAT IS DRIVING THE MARKET OF GOLD?

Shan said gold demand is driven from central banks, big players, and above all, institutional investors want to have gold in their portfolio. In 2019, 5 major countries were buying gold from the market – Turkey 24%, Russia 24%, China 15%, Poland 15%, and Kazakhstan 5%, he added.

He mentioned that gold will continue to remain on global investor’s radar as metal is your wealth insurance and hedge against economic uncertainty. Equity markets are not settling down very soon. It would continue to lose its momentum as we are heading for H2/2020. Macro-environment for gold looks very suitable in the long run, and the smart money is coming to this asset class. Gold comes back in the financial markets with real force. Invest like savvy and smart investors as the market enters into more volatility in the next two years. – abdulbasit@theuaenews.com