HSBC: Safe Haven Buying Will Boost Gold Price in 2019Adam Gardiner
Original article written by Ben Kilbey and published at S&P Global on January 8, 2019.
It seems that many investors are finally wising up to what we’ve been saying all along about gold’s performance as a safe haven investment. With many investors concerned about stock market performance this year, gold is set to see increased demand and higher prices. James Steel, chief precious metals analyst at global megabank HSBC recently raised his estimate of gold’s average price to $1,314 per ounce. Time will tell, but we think that’s on the conservative side.
According to Steel, “Recent equity market declines, higher financial market volatility and other other risks are triggering renewed investor demand for bullion. … We believe gold is set to move higher in 2019, especially if the global economic outlook remains uncertain.”
Among the reasons HSBC and others are bullish on gold in 2019 are:
- More and more investors building up long positions in gold;
- Continued weakness in equity markets; and
- Increase in investment demand.
It’s worth noting that gold demand was up 3% among gold funds in 2018, driven largely by increased demand from Europe. With continuing weakness in Europe given the fear of recession in Germany, and with US stock markets not showing any signs of real recovery, we can expect to see even more demand for gold in 2019. Forget about $1,300 per ounce – $1,400 per ounce is far more likely when stock markets finally start to really move downwards. Now’s the time to get into gold while the getting’s still good.