Gold is ready to 'join the all-time-highs club' in the new decade - Bloomberg Intelligence

London (Dec 5)  New record high prices are in store for gold in the new year and the new decade, according to Bloomberg Intelligence, which projects gold “…to follow the dollar and equities to new highs.”

The U.S. dollar and equities can’t go up forever, and a normal reversal could boost gold to new all-time highs, said Bloomberg Intelligence (BI) senior commodity strategist Mike McGlone.

“It's a new year and decade and gold is poised to follow the dollar and equities to new highs, in our view. When, should be the primary question, particularly when the stock market and greenback succumb to some normal mean reversion,” McGlone wrote in December’s commodity outlook. “Absent a new higher dollar and stock-price plateau, gold is set to join the all-time-highs club.”

The outlook for gold remains favorable, which is in stark contrast to other commodities, such as oil, said McGlone. Gold stands out because of its divergent strength in the face of higher U.S. dollar and rallying U.S. equities, BI’s outlook specified.

“Gold is the divergent strength standout. Up almost 15% in 2019 despite the 2% gain in the trade-weighted broad dollar indicates the metal is on solid footing for further advancement,” McGlone said.

This year was a breakout year for gold after five years of range-bound trading. On top of that, strong U.S. dollar going into 2020 works in favor of the yellow metal.

“Gold should remain the stalwart unless equity and dollar strength is sustained. That's unlikely, particularly as we approach a contentious U.S. presidential election. Divergent strength in the gold price, despite greenback and equity market record highs, indicate anticipation of a more favorable end-game for the quasi-currency,” McGlone explained.

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