WGC Foresees Gold’s Strong Return in 2020

WGC finds higher risk and uncertainty combined with lower opportunity cost to be supportive of gold’s investment demand in 2020.

SEATTLE (Scrap Monster): The new report published by the World Gold Council (WGC) analyzes gold’s potential performance across four hypothetical scenarios provided by Oxford Economics.

WGC finds higher risk and uncertainty combined with lower opportunity cost to be supportive of gold’s investment demand in 2020. The above factors may offset the negative effect of lower consumer demand on account of contraction in economic activity. Thereafter, gold’s behaviour will depend largely on the speed of the recovery and the duration of monetary policy and fiscal stimuli.

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Under the ‘swift recovery’ scenario, gold’s are likely to remain positive, decrease between 2020 and 2022 and then turn negative over the next two years. In the case of ‘US corporate crisis’ scenario, gold’s strong implied returns during the current year will be followed by consecutive falls over the next four years. In a scenario of ‘emerging markets downturn’, gold’s implied returns in 2020 and 2021 will be higher than most of the other scenarios. Also, under the ‘deep recession’ scenario, gold’s strong performance in 2020 will be followed by decreasing gains through 2023, before turning negative in 2024.

The above gold price analysis was carried out using the new web-based quantitative tool called Quarum.

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