Gold prices per ounce managed to climb to $1,524.23 on 31 December as the dollar deepened to a six-month low, signifying a 19% gain in the precious metal since the start of the year - its biggest annual rise since 2010, according to Bloomberg. JPMorgan Global Market Strategist Hannah Anderson has, nevertheless, warned investors who are now positioning their portfolios for 2020 that gold is not necessarily the best option for a sound portfolio protection.
“People are starting to question how much further they have to run after that stellar 2019”, Anderson told Bloomberg TV, while referring to equities gains. “Some investors are starting to wonder if gold is going to be the safety for their portfolio. Personally, I think investors probably want to rethink that consideration”.
“There are very few certain environments in which gold does well, and it’s not necessarily the case that 2020 won’t be any of those”, the expert added. “But if you look at the performance of gold in market downturns, it’s really a mixed bag, there’s no sure thing when it comes to gold”.
“In the next downturn, I do believe that bonds still could be defensive assets”, Anderson concluded.
The warning comes amid a potential easing in trade tensions between China and the US, as the White House’s leading trade adviser on China Peter Navarro recently announced to Fox News that a deal with Beijing had been completed and was “in the bag”. However, since the trade talks between the two states have not been finalised, investors are still turning to gold as the traditional “haven asset” despite global stocks currently being at all-time highs.
Meanwhile, the Bloomberg Dollar Spot Index has revealed that the US currency is still heading towards its biggest quarterly loss since the first months of 2018 when tracked against the performance of a basket of 10 leading global currencies. Such precious metals as silver and platinum also increased up to 17% and 22% respectively this year, a considerable gain in comparison to previous years.