Dutch investment bank ABN Amro gave a positive outlook on gold prices for the long term. The main factors of support will be the “soft” monetary policy of the Central Banks and low interest rates.

According to analyst Georgette Boele, weak economic growth in the Eurozone and the deterioration of the US economy will be important factors in supporting the global gold market. The bank believes that in the next 2020 a favorable situation will develop for the price of gold. Investors will again be able to rely on the profitability of their investment in the yellow precious metal.

The Dutch bank believes that the ECB will reduce interest rates by 10 basis points in the first quarter of 2020, as well as increase its asset repurchase program as part of a quantitative easing. At the same time, the US Central Bank (US Federal Reserve) can lower its rates by 25 basis points. All of these factors will act as powerful support for the gold market.

In addition, Böhle believes that the volume of government bonds with negative yield will increase, which will also positively affect the world price of gold. Although gold does not provide interest income, it does not have negative interest.

The bank also said that the US dollar will gradually decline next year, which is primarily due to the deterioration of long-term fundamental data and the weakness of short-term market dynamics. It is worth recalling that the dollar and the price of gold have an inverse correlation to each other. This means that with the weakening dollar, the value of the yellow precious metal begins to grow. The bank believes that in the coming years this correlation will continue.

According to the forecast of ABN Amro, the average price of gold in 2020 will be $ 1,500 per ounce, although in the 4th quarter it can grow to $ 1,575 per ounce. After that, price growth should continue.

The bank’s review also indicates that in the coming weeks investors should be prepared for a temporary decrease in the price of gold, as long positions are formed on the futures market that will hinder growth: speculators will use any surge in the price of gold to take profits. Therefore, the precious metal will be under pressure.