Gold will keep gleaming in 2019

The past few months have been good for gold. And there is scope for further gains.

The past few months have been good for gold. The recent tumble in equity markets, higher volatility and fears of further trouble on the trade front have all prompted investors to seek out a safe haven. While the FTSE All World index has lost 10% since its September peak, gold has gained 7% over the same time period.

There is scope for further gains. If US Federal Reserve chairman Jerome Powell decides to stop raising interest rates, as he indicated he might, "or even go the whole hog and cut them", gold could benefit, says Russ Mould, of platform AJ Bell. Such a policy reversal would reflect a weakening US and global outlook, bolstering gold's appeal as a safe haven.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

And because gold has no yield, its relative appeal grows when expectations of rate hikes dwindle. In addition, gold is widely seen as a hedge against inflation. With wages rising even as overall growth is slowing, stagflation could be on the cards, which would be excellent news for gold.

Note too that central banks wanting to diversify their foreign-exchange reserves are expected to buy more gold than last year; they should account for 12% of global demand, reckons Capital Economics. Finally, there is now talk of backing cryptocurrencies with gold, as Carol Lewis points out in The Times. That's another reminder that gold has been a store of value and an alternative currency for centuries, while bitcoin is a fad.

Advertisement

Recommended

Visit/investments/commodities/600639/commodities-look-cheap
Commodities

Commodities look cheap

Gold may be on a bull run, but industrial commodities, including copper, zinc and aluminium, remain cheap.
17 Jan 2020
Visit/520466/gold-dont-panic-and-dont-sell
Gold

Don’t panic about Iran – but don’t sell your gold either

Markets have reacted calmly to the tension between the US and Iran. But don’t get too complacent. It’s still a good idea to hold on to some gold as in…
9 Jan 2020
Visit/520221/heres-how-gold-could-rise-above-7000-an-ounce
Commodities

Here’s how gold could rise above $7,000 an ounce

That the gold price could hit $7,000 an ounce is a logical and plausible possibility, says Charlie Morris. Here, he explains how it could get there.
30 Dec 2019
Visit/520199/gold-is-in-a-bull-market-and-it-could-have-much-further-to-go
Commodities

Gold is in a bull market – and it could have much further to go

Many investors forget that gold is still the best-performing asset of this century, says Charlie Morris. It could also have much further to go.
27 Dec 2019

Most Popular

Visit/economy/uk-economy/600837/rishi-sunak-new-chancellor-spending-splurge
UK Economy

Britain has a new chancellor – get ready for a major spending splurge

The departure of Sajid Javid as chancellor and the appointment of Rishi Sunak marks a change in the style of our politics. John Stepek explains what's…
14 Feb 2020
Visit/economy/600814/money-minute-friday-14-february-the-latest-from-rbs-britains-state-owned-bank
Economy

Money Minute Friday 14 February: The latest from RBS, Britain's state-owned bank

Today's Money Minute previews results from RBS – Britain’s state-owned bank – and from pharma giant AstraZeneca.
14 Feb 2020
Visit/investments/property/600826/living-on-a-houseboat-the-pros-and-cons-of-a-floating-home
Property

Living on a houseboat: the pros and cons of a floating home

Living on a houseboat sounds romantic and peaceful. But it’s not as straightforward as it looks, says Nicole Garcia Merida
14 Feb 2020
Visit/investments/stockmarkets/european-stockmarkets/600725/is-2020-the-year-for-european-small-cap
Sponsored

Is 2020 the year for European small-cap stocks?

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, on why he believes European small-cap stocks are performing well.
12 Feb 2019