Friday, January 18, 2019

In 2019, gold could regain its luster

Gold, a decorrelated asset of the financial markets, has been rising for four months. In an uncertain geopolitical and economic context, this year 2019 could mark its great return.

By Laurence Boccara Posted today at 06:00

Time to Reading 3 min.

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"This renewed momentum is being driven by China, India, Germany and the Middle East, reputed to be major international buyers of this metal. "
"This renewed momentum is being driven by China, India, Germany and the Middle East, reputed to be major international buyers of this metal. »Ajay Verma / REUTERS

After five years of erratic evolution, gold has found its brilliance since this autumn. Despite a decline of 0.9% in 2018, the rise in the ounce registered between September and January is around 9%. Its quotation is close to $ 1,300 (1,124 euros). Recent, this rebound seems to mark a change of trend, so much so that several specialists of this market estimate that the yellow metal should in 2019 return more markedly.

On January 10th, a note from CPR Asset Management titled on a possible "Alignment of the planets". "The upside potential is so far high. During the first quarter of 2019, the ounce could approach the zone of 1400 dollars », advance Benjamin Louvet, commodities manager at OFI Asset Management.

To date, several factors argue for a continuation of the rise in gold. First, current geopolitical events. The possible rise of populism during the May European elections, the complicated Brexit negotiations and a historic shutdown in the United States are all likely to have an impact on the evolution of the economy. 'Mondial economy.

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As for the trade tensions between China and the United States and the recent fall of the financial markets, they also weigh on the moral of the investors. Worried, they begin to develop an aversion to risk. Another notable parameter: "US stocks are historically very expensive, bonds do not pay much, gold is starting to stand out and this should continue"says François de Lassus, consultant at CPR Gold Devises.

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"Already high, the dollar seems to have today a significant downside potential. But the value of gold is deemed to evolve in the opposite direction to that of the greenback.explains Arnaud du Plessis, thematic equity manager and gold specialist at CPR Asset Management. It is the contraction of real interest rates (nominal rates-inflation) that should give more interest to the yellow metal. Last factor contributing to the return to favor of gold: "An increase in global demand for physical gold and investment, especially since the third quarter of 2018", stresses François de Lassus.

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This renewed dynamism is driven by China, India, Germany and the Middle East, reputed to be major countries purchasing this metal on the international scene. In times of uncertainty, gold regains its unique character of protection since"It is negatively correlated to all other financial assets"recalls François de Lassus. Since 2008, this metal remains a store of value and a strategic asset for the central banks that still buy it. This tangible asset also serves as a safe haven for individuals.

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