Gold to Outperform Cyclical Commodities in 2020
The UBS ‘Year Ahead 2020’ report, in its gold outlook for 2020, predicts further appreciation in prices in 2020.
SEATTLE (Scrap Monster): UBS- the multinational investment bank and financial services company expects gold to outperform more cyclical commodities in 2020. The escalating political uncertainties and likely weaker U.S. dollar are likely to push gold prices higher, it said.
The UBS ‘Year Ahead 2020’ report, in its gold outlook for 2020, predicts further appreciation in prices in 2020. However, the pace of appreciation is expected to lower when compared with 2019. It must be noted that gold prices had surged higher by almost 25% during the previous year.
The report notes that political uncertainty could trigger safe-haven flows into gold. A weaker dollar could further lift the gold prices, as the yellow metal is prices in U.S. dollar. On the other hand, ongoing economic concerns are likely to dampen the outlook for cyclical commodities. Both industrial metals and oil are likely to slip to surplus markets, mainly on account of lack of recovery in manufacturing activity.
Furthermore, UBS predicts 5% surge in equity earnings in the U.S and 6% surge in emerging markets. On the other hand, Eurozone is likely to witness 3% contraction in equity earnings in 2020. Also, the UBS report foresees some major challenges to emerging markets in the forthcoming years.
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