Gold prices could soar higher later this year, due to the United States Federal Reserve’s strong posture on interest rates and lingering global uncertainties, a precious metals expert has predicted.
Central banks have been buying gold at levels not seen in 50 years, as part of a broader diversification of reserves away from currencies including the U.S. dollar, the expert said.
Concerns over the global economy and geopolitical issues including the trade war between the United States and China have added to uncertainty, which often benefits gold that’s considered a safe haven — or assets that tend to retain or increase their value even during market turbulence.
Spot gold was trading at about $1,286.646 an ounce as of 0645 GMT on Tuesday.
Gold prices have largely been stuck in a range of between $1,217 to $1,330, according to Martin Huxley, Singapore-based global head of precious metals at financial services company INTL FCStone. But he said that could change.
“I think that we expect gold to continue to trade pretty much within that range for the coming months,” Huxley via CNBC.
“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 added, referring to gold’s price per ounce in relation to the dollar.
Huxley said the Federal Reserve’s signal that there will be no more interest rate hikes this year has helped boost the outlook for gold and other metals.
The view is that there won’t be any interest rate rises this year, which again will be supportive for the precious metals sector,” Huxley said.
Huxley is not alone in his view on gold. Metals expert Suki Cooper of Standard Chartered said last month she expects bullion prices to move higher this year.
“We expect gold to end the year on a strong note,” Cooper said on CNBC’s “Futures Now”. “It’s in the fourth quarter that we’ll see gold prices testing the highs that we saw in 2018 and 2017, and potentially matching the highs from five years ago.”