Easy monetary policy and low interest rates are here to stay and that will support gold prices in the long term, but investors need to be a little patient, according to one market analyst. In her 2020 outlook forecast published Wednesday, Georgette Boele, senior FX and precious-metals strategist at ABN AMRO, said that she is bullish on the precious metals next year, but the yellow metal could see a modest correction in the first half of the year. “Even though the longer-term outlook looks solid, we expect substantial price weakness in the coming weeks and months,” she said.

The comments come as the gold market sees solid losses Wednesday; the precious metal has been unable to follow through on Tuesday’s 1% rally. February gold futures last traded at $1,480 an ounce, down 0.30% on the day. Boele explained that gold still has to work through a glut of bullish speculative interest that is keeping a lid on prices. “These positions currently hang over the market and prevent prices from moving substantially higher, because every uptick in prices is used to take profit on existing positions. As a result, the downward pressure on prices increases,” she said.

Looking at the downside, Boele said that she is watching critical support at the 200-day moving average, which comes in at $1,400 an ounce. Looking past the near-term risks, the Dutch bank is bullish on gold, looking for the price to push above $1,600 an ounce by December. The bank forecasts an average price of $1,500 an ounce. Monetary policy and lower real interest rates are the biggest reasons Boele expects to see higher prices in the second half of 2020. She added that ABN AMRO economists expect the Federal Reserve to cut interest rates in the first quarter of 2020. “Central banks remain keen to support growth and/or to reach their inflation target. In the near term, we expect growth in the eurozone to remain weak and the economic situation in the U.S. to deteriorate,” she said.

“The outstanding amount of negative-yielding government bonds will probably grow; while gold has no yield, it is at least not paying negative rates.” Boele also said that weak economic growth should weigh on the U.S. dollar, providing another bullish factor for gold. The Dutch bank also sees a similar pattern in silver. Boele said that she also likes silver in 2020 but she sees it lagging gold. The bank sees silver prices pushing to $18 an ounce by December 2020 and averaging the year around $16.60 an ounce. “We think that an aggressive sell-off in silver prices in the coming months will be an opportunity to position for higher prices later in 2020,” she said. “Silver prices will probably be more supported if global growth and global trade start to stabilize and improve somewhat.” Source: Kitco News