Market Views: Is gold set for an all-time high?

The precious metal has seen a sharp rally thanks to its safe-haven status – but will it surpass the record price set in 2011, and is it still a good bet? Six experts offer their views.
Market Views: Is gold set for an all-time high?

It has been an eventful time so far this year for gold – as for most other assets – with the yellow metak plunging along with equities in March and then soaring past a seven-year high, all within a few weeks.

Gold is seen as a safe haven asset that can hedge against sell-offs in the capital market. However, from March 11,when Covid-19 was declared a pandemic, it fell 9% in eight days to $1,474 an ounce, along with stocks, bonds and other financial assets.

As the oil price collapsed around the same time, market fears heightened and investors rushed to liquidate their financial assets, believing cash was king.

Yet the tide quickly turned. By mid-April, gold was above $1,700 and at one point was trading at its highest in eight years; it closed at $1,700 on May 1.

Indeed, as of Thursday (April 30) the metal was up 12.5% in 2020, making it the year's best performer among the main asset classes, bar 30-year Treasuries, according to Bank of America Merrill Lynch. This came as it posted record inflows of $11.3 billion in the four weeks to April 24 and added another $0.8 billion in the week just gone, BAML added. 

Will market fears drive the price above the September 2011 all-time high of $1,917, or can we expect a major correction any time soon? And if investors want to access gold, should they buy the physical commodity, futures, exchange-traded funds (ETFs) or other instruments? 

AsianInvestor received feedback from six investment experts. Their contributions have been edited for clarity and brevity.

Luc Luyet, currencies strategist
Pictet Wealth Management

How gold will perform will likely depend exclusively on investment demand in the next few months as other sources of demand (jewellery, official and industrial) could be weak.

In the short term, we would remain somewhat cautious about the gold price because of the limited room for US real interest rates, the key driver of investment demand, to fall much more, while low global risk appetite suggests continued US dollar strength. We see scope for a short-term correction towards $1,560 to $1,600.

However, it is unlikely that we have seen the end of the uptrend for gold. While price momentum may indeed slow because of the reduced support from US real rates, we have adjusted higher our three-month forecast from $1,500 to $1,580.

In the longer term, our expectation of some US dollar depreciation and the prospect of very low global rates for an extended time, coupled with large public deficits, point to higher gold prices. Our 12-month projection is now $1,780 (versus $1,700 previously).

The attractiveness of physical gold relative to other mainstream safe havens is likely to increase. Overall, if investors remain fearful of the long-term fallout from extraordinary fiscal and monetary stimulus, investment demand for gold could well stay strong, supporting prices. In this case, we could see gold prices break above their 2011 high of around $1,920 in the next three years. However, gold prices may then find it hard to make much further headway without a sharp increase in US inflation or a large depreciation of the US dollar.

David Chao, global market strategist for Asia Pacific ex-Japan

By any measure, gold is at an extremely elevated level. Since 1967, when the gold price was liberalised, the average price has been $896. Adjusted for inflation, gold prices hit a peak of $1,870 in 1979 and 2012 – which it hasn’t yet done so recently. 

Gold has traditionally been a recessionary and defensive asset, although recently the inverse correlation between gold and global equities has flipped (on a 20-day moving average). This suggests that gold is benefiting from equity market optimism about the global economic rebound.

In the near-term, I continue to expect gold to benefit from increasing economic optimism and suffer if sentiment turns. The inverse correlation should reassert itself once investment confidence moves too far in either direction.   

There are a few scenarios where I see gold being pushed above $2,000: if the global economy fails to materially rebound later this year; if Trump loses the presidential reelection; or if we have an inflation scare due to central banks’ “bazooka” quantitative easing policies overshoot.   

When it comes to owning gold as an investment, there are certainly pros and cons about each type of gold-related investment product. However, buying a gold ETF that is physically backed is the easiest and most cost-conscious way.  

Robert Jones, director
FCL Advisory

Everyone thought modern monetary theory (MMT) was just a joke; a pie-in-the-sky idea that was impractical, leading to too much debt that would rob our grandkids of their futures and possibly even hyperinflation. Unfortunately, without any chance to thoroughly debate and vet MMT, governments have had to flood the markets with liquidity to prop up economies amidst the raging coronavirus.  

Gold has been a huge beneficiary of this policy, and I don’t see a correction in the gold price coming any time soon. Most likely gold will rise to $2,000 per ounce in the coming year or two, as more investors realise that not only does it cost nothing to hold gold since interest rates are zero or negative, but also that gold should protect against a range of ills including the chance that the financial system implodes from a combination of too much leverage in the system together with rising personal and corporate defaults.  

Although a bit of a hassle and expense, I recommend investors avoid the financial system altogether and purchase physical gold bars and store them in secure vaults, outside of banks. Storage outside the banking system gives the added peace of mind that if the banking system freezes up, gold ETFs, paper gold, gold stored in bank vaults, and gold derivatives that simultaneously get frozen will be someone else’s problem, not yours.

Nemo Qin, senior analyst


As investors look to mitigate their losses, gold remains one of the more efficient hedges, especially given the current volatility in oil and equity markets. As a result, I don’t think gold will undergo a major correction any time soon, and in the short term, I anticipate the price to fluctuate around the current levels. In the long-term, I see gold continuing to rise for the rest of the year due to ongoing uncertainty as a result of Covid-19.

I estimate that the gold price will continue to trade between $1,700 and $1,800 this year. I don’t think the price will rise above the previous record highs we saw in 2011 this year, or next.

Investors may choose to stay away from physical gold as it is less liquid, and often has higher management fees attached to it. Gold-backed ETFs are a long-term option, although this does expose the buyer to counterparty risk. Gold futures are generally not suitable as long-term investments as they are leveraged products, but can provide short-term wins, albeit at a higher risk.

Paul Sandhu, Asia Pacific head of multi-asset quant solutions and client advisory
BNP Paribas Asset Management

The concept of the “gold standard” has passed, and so the idea of gold being a safety asset can be debated. However, as many investors are focused on diversification of market risk, either by optimising market asset classes in more effective ways or pursuing asset classes outside of their usual investment tool set, commodities including gold could be a good addition to the portfolio. 

As gold has risen significantly year to date (over 10%) and Covid-19 is reaching a plateau in some countries, it will be interesting to see the dynamic in the next few months. There may be opportunities to buy dips in the commodity space including gold in the near future. And as it continues to be a less correlated asset class to equity and bonds, not only does it provide a natural hedge against inflation, but it also provides a diversification benefit to the overall portfolio.

Robin Tsui, Asia Pacific gold strategist for the SPDR business
State Street Global Advisors


The pandemic, triggering a global economic downturn and recession fears, has led to a flight to quality, benefiting gold so far in 2020. While the pandemic may continue to drive gold investment demand, we believe it will be the prolonged low or negative interest rate environment globally that may continue to sustain gold’s current rally.

Historically, a low real interest rate environment in the US had benefited the gold price, and with the current 10-year US treasury real yields in negative territory, we believe there may be a continuation of the strong appetite for gold.

The aggressive monetary policy adopted by central banks globally may potentially lead to currency devaluation over the long term, which may benefit gold in the long run as gold cannot be printed, and the growth in annual gold production is limited.

In the short term, we expect gold to trade between $1,700 and $1,800 with more upside potential to the upper range as low and negative rates, coupled with strong investment, gold demand may continue to support the gold price.

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