What will be the price of gold in 2020
Gold has always been considered the most reliable investment. By investing in this precious metal, people were able to maintain their savings. Experts, predicting the onset of the global financial crisis in 2020, already today advise buying precious metals for free money. This approach leads to a constant increase in its value.
How is the value of gold determined?
How much gold will cost in the coming 2020 is not determined by individual countries and banks. The price is set at the London electronic auction. This happens twice a day based on an analysis of demand and the market offers. The largest international financial institutions take part in the auction. From 1919 to 2015, the price was determined by representatives of four banks. Society Generale, Scotia Mocatta, Barclays Capital, HSBC made the so-called gold fixing, determining the average value between the highest bid price at which gold was bought and the lowest value of demand. The obtained indicator was recorded in three currencies: euro, US dollar, pound sterling.
Today, prices are set electronically. This is also done on the basis of tenders, in which 13 financial organizations can participate. Among them are Bank of China, UBS, Standard Chartered, HSBC Bank USA NA. Russian banks are not bidding. The price in US dollars per troy ounce corresponding to 31.103 is nominated. It is indicative of all contracts.
In Russia, the value of gold is indicated in rubles. It is determined by the Central Bank, based on the relevant values established in London, and the national currency against the US dollar.
An analysis of the precious metals market shows that, starting in October 2018, the value of gold is growing. Insignificant drops are periodically noted, however, in general, the trend is obvious. If at the beginning of November 2018 the precious metal was worth $ 1,200 per ounce, then in February 2019 it was already more than 1300.
This dynamics is in line with expert forecasts drawn up several months and even years ago. It is noted that the change in the value of gold has a certain cyclical nature - there is a sharp rise, and then a gradual drop. The last time a major leap occurred in 2010, 2011. In December 2010, the maximum figure reached $ 1,420 per ounce, while in January of the same year the minimum value was 1,078. The peak value in 2011 was $ 1,752 per ounce . Over the next seven years, there was a decline, alternating with a slight increase, which did not compensate for the fall.
According to experts' forecasts, the beginning of such a cycle is expected in the near future.
A sharp increase in the price of the precious metal will occur in 2020. Economists at Capital Economics believe it will grow to $ 1,400 in a year.
According to other analysts, we should expect growth of 100 or even more percent. At one time, Standard Chartered Plc. published a report in which the real achievement of gold reached $ 5,000 per ounce. However, there are also analysts who expect a decrease in prices.
What determines the price of gold
How the price of a precious metal behaves in 2020 depends on numerous factors. The key is the law of supply and demand. With a small amount of goods available on the market, its value rises.
Deficiency is formed under the influence of the following reasons:
- Drop in gold mining and production. This is an economically justified process - a reduction in the sale price leads to a decrease in profits and available funds that can be used to upgrade and expand production. This in turn provokes a decrease in production. It is also decreasing due to the fact that stocks of raw materials are gradually running out.
- Reduced production forecast according to geological exploration. Despite the stable demand for precious metals, interest in exploration and exploration is declining due to their high cost, the need to attract huge financial and human resources.
- Restriction of gold supplies to foreign markets due to the desire of countries to protect themselves from sanctions and a possible financial crisis.
- The deficit is also provoked by increased interest on the part of state banks, an increase in the purchase of ingots when deciding to increase gold and foreign exchange reserves.
Increase in demand
Demand is increasing due to:
- Lower real value of the dollar. At the heart of this is an increase in the money supply, which is not provided with production and goods.
- Increasing metal demand through electronic industry.
- Lack of reliable assets.
- Natural and man-made disasters occurring in places of gold mining, as well as provoking a panic among the population.
Change in demand is also possible downward. This happens under the influence of factors such as:
- Dissemination of information on the discovery of new deposits, high production volumes;
- Growing interest in enterprise assets, national currencies, especially the US dollar;
- Optimism of stock markets.
Any of these processes leads to a drop in the value of gold bullion.
Gold pricing in 2020
Despite the presence of objective factors, pricing is often the subject of manipulation. For this, false forecasts, incorrect stock information are disseminated, panic is artificially created. An important role in gold pricing is played by protectionism policies and the complex relationship between the United States, China and some other countries. Sanctions against Russia, as one of the largest producers of precious metals in the world, add to the tension.
According to experts, the price of gold in 2020 will increase. Perhaps the world is waiting for a significant leap, at which the cost of this metal will increase by 2 times. Growth will be driven by increased demand and a possible shortage that the market will face.
From the video, find out what will happen to the price of gold in 2020, see the real price forecast: