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ABN AMRO’s senior FX and precious metals strategist, Georgette Boele, notes that gold prices have gained 17% this year and argues that gold prices have risen too sharply in a short period and are likely to make a correction in the coming months.  

Key quotes

“The net-long positions in the futures market are at an extreme territory and the total ETF positions are also substantial. If the newsflow becomes less supportive, a profit-taking wave could push gold prices easily towards USD 1,400 per ounce again. In addition, we think that the amount of monetary policy easing by the Fed and the ECB for this year is mostly priced in.”

“So this will unlikely push gold prices to new highs. Moreover, we expect the US dollar to be resilient for the remainder of this year despite Fed rate cuts. This is because waves of risk aversion will also support the US dollar. Taking the above together we keep our gold price forecast for the end of 2019 at USD 1,400 per ounce, but we raise our forecast to USD 1,600 (from USD 1,500) for the end of 2020.”