As this year’s Christmas and New Year celebrations kick-off, and 2019 draws to a close, here we are reflecting on the year that has passed, as well as pondering the possibilities for gold in 2020.
2019 was not short on ups and downs! Gold had an impressive year in 2019, smashing records through the summer before hitting an all-time high of £1,282 per ounce in September.
July saw gold hit its highest level in six years, as we saw tensions rise in the Middle East as well as the resignation of Theresa May as Prime Minister. Markets became increasingly concerned about the possibility of the UK heading towards a No-Deal or Hard Brexit and investors put their faith in precious metals.
August 1st then saw the price of gold break through to reach its highest ever recorded price in GBP. But our friend gold didn’t stop there. It continued to soar, and these historical highs looked to be due to several factors, all coming together to create gold’s ‘perfect storm’. The Pound weakened significantly as markets became increasingly concerned about Brexit due to the appointment of Boris Johnson as Prime Minister. The global economic outlook showed disturbing signs, and we saw interest rates cut in the US and Europe. Plunging interest rates and negative yielding bonds meant gold’s attraction only deepened for investors and uncertainty over the US-China trade war also did not help matters, with Donald Trump escalating his dispute with Beijing, as well as ongoing tensions with the Middle East.
Gold also went the same way in the USA – rocketing to more than $1,500 an ounce, levels unseen since 2013.
The arrival of autumn saw the price of gold drop from its summer highs. A further delay to the Brexit deadline and the announcement of an early election set for December saw precious metals investors bide their time. Reports stated that the UK economy had slowed, yet had narrowly avoided recession, and although we saw gold drop from it’s record-breaking summer heights – in comparison, the price was still sitting pretty.
November saw the US and China indicate a possible readiness to sign phase one of a trade deal before the end of the year, boosting the US dollar, as the US economy looked to possibly be a large factor in decision making for gold investors in the near future. The US interest rates, the dollar and the US Federal Reserve all also came into play.
The Conservative win in the December UK general election saw the pound surge and the price of gold fall, dipping below £1,100 for the first time since the summer. However, just a few days later the Pound rebounded, and gold looks now to be recovering its upward slope.
Looking to 2020
So, what’s to come in 2020?
As always, we can speculate on what might happen but unfortunately, we don’t have a crystal ball to look into for inspiration. The next few weeks will see the first phases of Brexit, and then further intense negotiations over Britain’s possible trade deals with the EU. However, these trade deals have a deadline for the end of 2020, giving a very short period for a good deal and many see this to be an unrealistic goal which again leaves markets nervous over the possibility of a No-Deal Brexit. This looks to mean we have more Brexit uncertainty over the next few months which could mean gold prices are boosted.
However, as we have seen in 2019, our favourite precious metals do like to surprise us when we least expect it. Anyone who had the knowledge (or guess work) to buy at the beginning of the year is looking at finishing the year with a healthy margin. It may be a little bit less than it was in the summer, but still not a bad return on your money!
One thing is for sure, we will see the usual ups and downs in 2020, but we must remember the purpose of holding these precious metals. A physical asset that you can hold in your hand, that cannot be deleted with the touch of a button. For investment in, or for, the future.
Merry Christmas and Happy New Year from all the team at Atkinsons!