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Why Blackstone Says Investors Need To “Watch Gold In 2020”

Why Blackstone Says Investors Need To “Watch Gold In 2020”

Gold prices have been quietly climbing higher, and one Wall Street veteran says investors should keep an eye on the shiny metal in the new year.

“Watch gold in 2020,” Wien told CNBC. “It has a chance to be an interesting investment.”

Wien’s comments come as gold futures settled above $1,500 an ounce for the first time in two months this week as investors got defensive heading into the Christmas holiday. 

Gold’s breakout above $1,500 alongside record highs for stocks, a rebound in Treasuries, and a strong dollar “leads to an assumption that bulls will buy into the new year, so the market is trying to position ahead of time,” said BMO Capital Markets head of metals derivatives Tai Wong. “It has the momentum that is a little mysterious and no want wants to stand in the way.”

The climb comes amid a focus on several uncertainties in the year ahead.

“Gold and silver are rising on apprehensions over US-China trade deal and Trump and his impeachment proceedings,” wrote Insignia Consultants chief market analyst Chintan Karnani in a note to clients. “Physical gold demand is still lagging gold investment demand.”

President Donald Trump said earlier this month that a phase one trade deal with China had been reached and would be ready to sign in early January, and Chinese officials have confirmed that the two countries are working in close contact on the partial trade agreement. 

However, investors have been scooping up gold as a way to hedge against the possibility of a breakdown in the back-and-forth talks between the U.S. and China, or in the case of a disappointment regarding the details of the trade pact.

As for impeachment, the Senate’s trial against Trump is expected at the start of the new year and commodity experts warn that the trial could inject a measure of uncertainty into the markets.

“High political uncertainty due to continued trade tensions and the approaching U.S. elections should also be supportive [for] Gold,” wrote Goldman Sachs commodities researchers led by Mikhail Sprogis in a note to clients.

The rally in gold has also been spurred on by a focus on whether the Federal Reserve will continue its rate-cutting pause into next year following three rate cuts in 2019.

“Without a dovish Fed pivot, it’s unlikely gold will make explosive gains, but it does appear the market is trying to carve out a new higher trading range,” wrote Stephen Innes, chief Asia market strategist at AxiTrader, in a note to clients.

“Caution needs to be exercised as the bullion markets could be extremely volatile, given the market’s low liquidity profile, especially to the downside as trade news remains positive and equity markets still scaling new heights,” Innes said.

Innes added that the current trends are “a very favorable sign for gold bulls.”

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