By John McDonald
2019 will likely post one of the largest price increases gold has experienced in the 21st century.
That momentum could take gold prices more than $200 per ounce higher by the end of the first quarter of the New Year, putting values near $1,700 an ounce.
“Get ready for a fast and sizable pop in gold prices,” declared Forbes contributor Simon Constable.
He believes 2019 has been a building year for the gold run as the metal has remained high in its trading range but “moved broadly sideways” after a run-up during the third quarter.
So, will gold really hit a $1,700 peak by the end of the first quarter of 2020? It certainly appears possible. Here are three signs Constable’s prediction could be right:
1. Analysts say September 2019 was the first of a series of short-term spikes.
Wolfe Research analysts John Roque and Rob Ginsburg recently wrote on the topic, “Gold got very overbought into late August/early September,” citing this as the reason gold prices fell from around $1,550 to just under $1,500 during the fourth quarter of 2019.
However, the analysts went on to write that the third-quarter move likely was the first of a series of short-term boosts in gold.
They predict the next short-term move is likely to occur in early 2020 and will “see a surge of around 15 percent over the next 75 days or so.”
2. 2019 was actually a building year for gold values.
2019 posted one of the largest increases in gold values in the 21st century, but gold moved mostly sideways for much of the year.
This type of move creates a “base” for an extended bull rally.
According to the Wolfe analysts, that rally is likely to result in an overall median gain of 14 percent and an overall average gain of 15 percent.
Those numbers would place gold prices around $1,679 by the end of February, and momentum could easily carry values even higher into March.
Although some of that value might not hold permanently, the net result would certainly be a positive one in that scenario for investors who bought gold before the start of the New Year.
3. Current momentum could carry gold to all-time highs, not just recent benchmark values.
If $1,700 per ounce is not enough for you, then you will certainly find the Wolfe report’s final conclusion appealing.
The analysts wrote they expect to see gold “make a new all-time high in this cycle.” That would put gold values around $1,900.
Gold last neared the $1,900-benchmark in September 2011, when it reached $1,895 per ounce as investors worried the United States might default on its national debt.
When the U.S. economy improved and inflation remained low, prices fell as investors gained confidence in other asset classes.
However, global economic volatility is likely to keep even confident investors hedging their bets with safe-haven assets in the coming year, and that is good news for every investor who already owns gold when the next upturn for the yellow metal occurs.