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Gold set for sustained rally in 2020 commodities 'shift': Gainesville

London — Commodities markets look set for a cyclical shift in 2020, which may be bearish for most but bullish for gold, according to Everett Millman, precious metals specialist with US-based bullion dealer Gainesville Coins.

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Gold's price may average $1,600/oz in 2020 in a sustained rally, up from an estimated average of $1,450/oz for 2019, as its role as a safe haven becomes "more and more relevant," Millman said in an interview this week.

"The timing is close for the next cyclical shift," the specialist said, claiming that many people were unaware of the fact that for the last 10 years, since the global economic crisis, commodities have been in an overall bull market but that the current negative interest rates environment, high debt levels, trade tensions and slowing economic growth now all point to a bearish cycle.

"We're in uncharted territory," Millman said. "This makes gold a more attractive safe haven."

Gold's 15%-17% price gain in dollar terms in 2019, despite subdued inflation and some 2% economic growth in the US, testifies to its potential as an investment, according to Millman. Signs of major US foreign policy changes amid increased east-west and north-south global trade tensions, with US-China trade talks having reached little more than a ceasefire, may also be seen as bolstering gold.

There is growing sentiment, including in some Middle Eastern countries, that gold could be used as an alternative to the dollar for international trade settlements, he said. Consolidation and merger and acquisition activity seen this year in gold also indicates a willingness to invest in new gold projects.

Another factor bolstering gold is that "Central Banks restarted buying gold in a big way two years ago at the same time as most are cutting interest rates," the specialist said.

Prospects for silver, which typically lags gold, also look promising, according to Millman. He sees a fair target price for silver in 2020 as $18/oz, slightly higher than prices in recent weeks.

Silver's full potential may still be several years off, however, as new technological uses for the metal in diverse industries including solar panels and electronics are still emerging, he said.

-- Diana Kinch, newsdesk@spglobal.com

-- Edited by Anthony Poole, newsdesk@spglobal.com

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