By John McDonald
Thanks to a vast array of long- and short-term geopolitical factors and economic trends, many precious-metals analysts believe gold could hit $2,000 an ounce in the near future. While most are unwilling to predict exactly when that might happen, the most bullish believe even a relatively short-term extension of trade tensions between China and the United States could send gold through the $2,000 ceiling as U.S. fears over a national recession continue to mount.
Some cite momentum that has been building since 2003 for this expectation. “In the last eight to 10 years, we’ve seen a bull market in stocks and lived in a low-interest-rate environment. That’s dangerous for inflation,” explained Forbes & Manhattan CEO Stan Bharti. He expects gold to jump from just under $1,500 at present to $1,600 by the end of September 2019 and to hit $2,000 by the end of 2020.
Other analysts agreed breaking through the $2,000 benchmark is “a near certainty, given enough time.” Ongoing market concerns such as the Fed’s potential move into quantitative easing and a series of interest-rate cuts, the devaluation of the dollar in response to China’s devaluation of its own currency, and various international conflicts in Iran, Hong Kong, or elsewhere. “[A climb to $2,000] will likely inevitably happen,” said Metals.com Vice President and Senior Analyst, Deric Scott.
Interestingly, China, which had been importing unusually large amounts of gold for more than a year, recently implemented restrictions on gold imports. Traders speculated the high volume of gold imports was an attempt to fortify the yuan against potential pressures in the currency wars that appear to be brewing. China cut its shipments of gold into the country by somewhere between 300 and 500 ounces compared to 2018. Last year, China imported nearly one-third of the world’s total supply of the yellow metal.
Many precious metals experts predicted the value of gold might fall in response to lowered import volumes from China, but this has not happened. Scott noted the move might be an attempt to force market price downward so China could buy up the metal at a lower price, closer to $1,400 than the higher prices most economists presently are predicting. “[Those prices] would be seen as a huge opportunity to buy,” he explained. So far, however, the market is not responding according to plan. In fact, gold demand is soaring despite Chinese withdrawal, which is great news for gold investors everywhere.
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