Gold buying frenzy by global central banks to push bullion prices higher

Gold prices may attain $1,400 per ounce in 2019 due to the US Federal Reserve’s much less aggressive stance on rates of interest, bullion purchases by central banks and lingering global uncertainties, market analysts clarify.

“I think that we expect gold to continue to trade pretty much within that range for the coming months,” mentioned Martin Huxley, global head of treasured metals at monetary companies agency INTL FCStone. “But over the second half of the year we expect it then to grind higher, and potentially it could test 1,400 towards the end of the year,” he instructed CNBC, referring to gold’s value per ounce in relation to the greenback.

The yellow steel was buying and selling at about $1,283.57 an oz as of 09:19am GMT on Tuesday.

According to Huxley, the Federal Reserve’s sign that there will likely be no extra rate of interest hikes this yr has helped enhance the outlook for gold and different metals.

“The view is that there gained’t be any curiosity price rises this yr, which once more will likely be supportive for the dear metals sector,” he mentioned.

Metals knowledgeable Suki Cooper of Standard Chartered additionally mentioned final month she expects bullion prices to transfer higher in 2019. “We expect gold to end the year on a strong note,” Cooper mentioned, including that it’s “in the fourth quarter that we’ll see gold prices testing the highs that we noticed in 2018 and 2017, and probably matching the highs from 5 years in the past.”

Central banks have been accumulating gold at ranges not seen in 50 years, as a part of a broader diversification of reserves away from currencies together with the US greenback. Their reserves surged 651.5 tons, or 74 p.c yr on yr, in 2018, in accordance to knowledge from the World Gold Council (WGC).

“And flip the clock again possibly 10 years, earlier than the monetary disaster, central banks have been internet sellers of gold and now there’s a dramatic twist, in all probability a thousand ton twist,” mentioned INTL FCStone’s Huxley. He defined that it’s not simply international locations comparable to Russia and Kazakhstan which are on a gold-buying spree however central banks in Poland, Hungary, the Philippines and China have additionally joined in.

“The fact that central banks and the official sector are diversifying their reserves, I think, is a very positive statement for the sector,” the knowledgeable mentioned.