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Where will be the ceiling for gold?

The gold price has been steadily rising in recent months. Supported by a number of factors such as Brexit, the trade war, geopolitical tensions and a possible global recession. As a result, from October last year the gold price started a substantial increase of € 33,000 to € 45,000 per kilo this week. This meant in dollars per ounce from $ 1,200 to $ 1550 at the end of August this year.

Many analysts have since adjusted their expectations, as usual. In dollars per ounces, $ 1550 is far from the all-time high of the years 2011/2012, so you could say that there could still be some upside potential for gold in euros. BNP Paribas predicts a $ 1600 breakthrough anyway, which does not seem very difficult. In addition, they predict four further interest rate cuts from the Fed until June next year.

With regard to global economic growth, the trade war is also not coming at the right time. No quick solution seems to be available for escalations within the trade problem either. Gold will then retain its role as a “safe haven” and the price is thereby supported.

In addition to the price of gold, all precious metals have been doing well again in recent months. Silver in the last month even with a price increase of more than 11%. The very specific properties of silver make it indispensable for many industrial products. In fact, industrial applications account for around 60% of worldwide silver consumption. The growing industrial activity will support the demand for silver. India is expected to be one of the largest silver consumers in 2019. Silver imports in particular rose year on year by 35% to around 225 million ounces in the country in 2018. The demand for jewelry production, which accounts for around one fifth of the total demand for silver, is also expected to show strong growth in 2019.

However, silver mine production declined by 2% in 2018 – the third consecutive year-on-year decline and is expected to fall by 2% in 2019. This can be attributed to the absence of development of new projects, decreasing ore grades and exhausting reserves. As a result, a shortage could arise, which in turn paves the way for higher silver prices in the long term.

Also, the “white” precious metals are also doing well this year, palladium has already reached new highest prices and platinum seems to have started to catch up. Time will tell.

Below the graphs of gold, silver, platinum and palladium: