Investment Ideas: Gold, Frankincense and Myrrh

As Morningstar.co.uk and investors across the UK celebrate Christmas we look at the investment prospects for the three wise men's gifts

Emma Wall 30 December, 2015 | 8:00AM

Gold

The price of gold has fallen this year – from 1200 dollars an ounce in January to 1070 today. Commodities were once again out of favour in 2015, and the outlook does not look positive for gold in 2016.

Morningstar analysts predict that the gold price will slip below $1,000 per ounce in 2016. Higher U.S. interest rates will weigh heavily on investor demand, while continuing deflation pulls costs lower. However, prices will recover in the future - in 2018 and 2019, when rising Chinese and Indian jewellery purchases fully close the gap left by investors. Analysts forecast a nominal gold price of $1,300 per ounce by 2020, or roughly $1,160 per ounce in constant 2015 dollars. This month Morningstar analysts revealed how since their introduction, gold ETFs have been one of the most volatile sources of demand and, at times, supply of the precious metal.

Through 2012 as gold prices rose, investors ploughed money into ETFs, leading to peak holdings of nearly 2,700 tonnes, equivalent to about one year's mine supply, explained analysts.

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About Author

Emma Wall  is former Senior International Editor for Morningstar

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