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Metal Market Report February 2020 - Week 2 Edition

February 2020 - Week 2 Edition

London Bullion Market Survey Sees Possible $2,080 (or $1,300!) Gold in 2020

Bullion Market Association (LBMA) released its gold price forecasts for 2020 and many analysts have predicted double-digit percentage increases, although some are clearly bearish. The highest forecast was $2,080 and the lowest was $1,300, reflecting a huge gap of $780 between highs and lows.

The most bullish analyst is Ross Norman, who predicted a $1,520 low, a high of $2,080, and an average $1,755. The super-bear is Bernard Dahdah of Natixis, who set a low of $1,300, a high of $1,450 (already exceeded, as gold has stayed above $1,520 in 2020) and $1,398 average. So far, Ross Norman has nailed the low and may be right on the high, but we have predicted a more moderate peak of $1,800 in 2020.

The LBMA’s average 2020 forecast is an anemic $1,559, but they may be too conservative. Their January 2019 forecast was far too conservative, calling for an average gold price in 2019 of $1,311.71. As it turned out, the average 2019 price was $80+ higher, at $1,392.60. They also appear to be too cautious for 2020, predicting an average $1,559, well below the current price but up 12% from the average 2019 price. If they are once again 6% too low in their predictions, we could see an average price of over $1,650 gold.

Gold Rose as Impeachment Process Fizzled Out

Gold traded over $1,570 all day Monday, February 10, up for the fourth day in a row, mostly on coronavirus fears. In the nearest “futures” contract (February), gold surpassed $1,580 in morning trading while the oil price is falling below $50 due to lower demand in China. Gold is still trading near its highest levels since April 2013 as the virus continues to spread, now reaching about 100 deaths per day and 900 total (all but one in China), with over 40,000 confirmed cases (nearly all in China), surpassing the global total from the 2002-03 SARS epidemic, similar to the coronavirus and also launched in China.

As expected, the impeachment process “fizzled out” after wasting several months – plus over two years of wasted investigations into Russian collusion. This is one reason why gold has not been able to penetrate $1,600, but the partisan bickering continues, and the Democrats will surely try another round of impeachment in Trump’s second term, especially if they take control of the Senate in November. This futile impeachment process took precious time and treasure away from the many needs of Americans, which can only be addressed through bi-partisan cooperation and action in both houses of Congress.


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