Gold just surged above a key price of $1,500 an ounce and is now on track for its best year since 2010

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Reuters / Pascal Lauener
  • Gold surged above $1,500 an ounce Thursday as investors position for 2020.
  • The gain above a key psychological level comes as investors focus on the Federal Reserve’s actions and weigh if it will continue its pause in interest rate cuts next year.
  • The precious metal has gained 17% this year and is on track for its best performance since 2010.
  • Watch gold trade live on Markets Insider.

Gold price per ounce rose above $1,500 on Thursday, breaching a key psychological level for the precious metal, as investors weigh if the Federal Reserve will continue its pause in interest rate cuts in 2020.

The gains in gold, long considered a safe-haven asset, came even as both stocks and bonds are set to end the year at a tandem high.

This year, gold has risen more than 17% including Thursday’s surge and is on track for its best yearly performance since 2010 on US-China trade war uncertainty and a slew of rate cuts from central banks around the world. Investors bought into the precious metal as a way to hedge their investments against a potential downturn as recession fears mounted throughout the year.

But now, the Fed is unlikely to continue to lower rates after three rate cuts in 2019. And on Tuesday, President Trump said that the phase-one trade deal in the works with China is done and will be signed soon.

That could mean that further gains from gold are muted, as one economist argued in September that more rate cuts from the Fed could send the commodity over $1,600. Another said that if recession risks were to continue, the precious metal could surge over $2,000 and hit an all-time high.

Even though recession risks have quieted for now, investors are still buying into gold to position for 2020. Goldman Sachs and UBS both forecast that gold will continue to gain in the next year and could climb to $1,600 per ounce.

But the view isn’t unanimous. JPMorgan has a bearish bet on gold in 2020 and thinks it could fall as riskier assets such as stocks take off.