ABN AMRO released on Wednesday a report that questions gold’s traditional role as a safe-haven asset and predicts lower gold and silver prices for the rest of the year.
In its report, the Dutch bank said it sees gold prices averaging $1,523 an ounce this year, up from its previous forecast of $1,490 but down significantly from current prices.
The bank’s precious-metal strategist Georgette Boele questioned gold’s role as a safe-haven asset during crises.
“In these periods the US dollar declined, but there was also a limit to these declines. However, in the most recent crisis, the global financial crisis, gold prices declined by more than 20% before recovering, meanwhile the dollar rallied sharply as liquidity dried up,” Boele said.
ABN AMRO expects silver prices to average around $16.60 an ounce in 2020, down from the previous estimate of $17.10.
“For palladium there are substantially less data points. Considering the cyclical nature of palladium prices, a risk-off environment is usually negative for palladium prices,” Boele said.
ABN AMRO recently downgraded its outlook for global growth and expects negative impact for all precious metals.
“We expect lower jewellery demand from India and China, lower industrial demand and lower autocatalyst demand (from the major economies). We think that the supply shortage for palladium will ease further in the near term due to lower demand,” said the precious metals strategist.
“Investors are still hoping that market panic will send gold prices much higher. We are very cautious. The safe haven behaviour of gold is far from stable as recent weeks have shown, and long gold is still a crowded trade,” Boele added.