For the past two months straight, gold has seen a decline in its price. However, the precious metal looks like it might shrug off its steady decline and rise back up in 2019 as the dollar weakens.
Gold looks as though it should rebound in the final quarter of 2018 to average around $1,375 per ounce in the last few months of next year. It could even reach as high as $1,400 per ounce according to the global head of commodity strategy, Bart Melek. This rate hasn’t been seen since 2013.
The Many Factors Contributing to the Fluctuation of Gold Pricing
With the dollar weighing down the bullion, it has dropped nearly 5 percent since mid-April. It’s now trading around $1,300 and shrugging off political turmoil in Italy as well as uncertainties about new global trade issues.
Melek, who is among speakers in Singapore this week at a precious metals conference says as time goes on, there will be increasingly fewer reasons to get into the US dollar. This factor could even reverse some of the flows. Ultimately, they think as 2019 approaches; the dollar will weaken which will help the price of the gold skyrocket.
Overall, the interest rate environment expects to stay low while the Federal Reserve hikes two or three more times in the coming year before it ends its tightening cycle.
This factor, along with fully valued equities, a downward trend in mine supply, and geopolitical risks should see a raised pressure to buy gold.
On average, prices look to hover around $1,290 during the third quarter. In the last three months of this year, it is estimated to be approximately $1,300.
Nicholas Frappell echoes Melek’s views. The global general manager at ABC Bullion in Sydney says in the short term, the stronger dollar is still giving a headwind to gold prices. This factor could end the year firmly for the precious metal.
Looking ahead, the conditions for the gold market seem more positive while the dollar rally becomes stale. While economic factors begin eroding the dollar’s strength, the tightening cycle could come to an end as early as next year.