A mark of 999.9 fine sits on hallmarked 12.5 kilogram gold bullion bars stacked at the Valcambi SA precious metal refinery in Balerna, Switzerland. (Photographer: Stefan Wermuth/Bloomberg)

With Turmoil Rampant, Gold Targets $1,300 as Gloomy 2019 Beckons

(Bloomberg) -- Gold is closing out 2018 with a flourish. Prices are poised for the biggest monthly gain in almost two years as concerns about next year’s economic outlook, volatility in global equities and a government shutdown in the U.S. spur demand for the metal as a haven.

Spot bullion hit a six-month high on Friday, topping $1,280 an ounce, as investors favored defensive assets, adding to holdings in exchange-traded funds over the month. Silver rose to the highest since August as it approaches its 200-day moving average, which could trigger further technical buying.

With Turmoil Rampant, Gold Targets $1,300 as Gloomy 2019 Beckons

Gold is powering into the year’s end as global equities sink in the fourth quarter. Banks including Goldman Sachs Group Inc. have flagged the potential for gains over 12 months as the Federal Reserve steps back on the pace of U.S. rate increases. As the final week of the year closes, there was a slew of downbeat economic data and outlooks from the U.S., China, Japan and Europe.

“We are very optimistic on gold,” said Benjamin Lu, an analyst at Phillip Futures Ltd. “There’s still a lot of uncertainty and gloom toward 2019.” Macro concerns, the U.K’s Brexit process, and high levels of borrowing are among risks that will aid bullion in the first quarter, according to Lu.

The metal will probably stay volatile in 2019, according to Richard Fu, head of Asia & Pacific at Amalgamated Metal Trading Ltd. in London. The metal may trade in a $1,150 to $1,375-an-ounce range as bullish and bearish drivers compete, he said.

Spot gold advanced as much as 0.5 percent to $1,282.23 an ounce, the highest price since June, and traded at $1,280.01 at 1:33 p.m. in New York, according to Bloomberg generic pricing. It’s up 4.8 percent in December, on pace for biggest monthly rally since January 2017. At the Comex, bullion for delivery in February rose 0.1 percent to settle at $1,283.

Among prints and outlooks from top economies on Friday and Thursday:

  • U.S. Stocks Mixed as Volatility Rules in Wild Week: Markets Wrap
  • CHINA’s economy slowed for a seventh month in December as the trade war, subdued domestic demand and decelerating factory inflation undercut growth, according to a Bloomberg Economics gauge.
  • U.S.: Consumer confidence slumped in December to the lowest since July while a gauge of labor market expectations fell by the most in 41 years.
  • EUROPE: ECB expects global economy to slow next year amid rising protectionism
  • In Washington, the partial U.S. government shutdown is likely to continue into 2019
  • Powell Has a Lot to Lose, Little to Gain in Trump Sit-Down

©2018 Bloomberg L.P.