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Gold prices will head higher in 2019, while the mining sector will see much more consolidation, according to BMO Capital Markets’ updated commodities outlook for next year.

The two main supportive triggers for the yellow metal will be a more dovish Federal Reserve and a weaker U.S. dollar, BMO analysts wrote.

“With the Federal Reserve hike stuttering as we head into 2019, and the USD relative outperformance in its final innings, we see further potential price gains in H1/19 before taking a backseat in H2/19 as the China-led industrial recovery takes place,” they said.

The report projected for gold to rise to $1,260 in Q1, then to $1,300 in Q2 and Q3, before falling back down to $1,270 in Q4.

We remain optimistic for precious metals heading into 2019. Precious metals faced up to the brunt of 2018’s macroeconomic storm, and are now emerging from the other side scarred but well positioned for early2019 outperformance,” the analysts said.

BMO said it views the 2018 gold price action as fairly decent, despite the metal’s prolonged drop below the $1,300 an ounce level.

“Gold pricing has actually held up very well through 2018. Considering much of the first nine months of the year saw steady USD appreciation, Fed rate rises and quantitative tightening, lower central bank purchases, persistently low inflation, weak physical demand and ETF outflows, in our view gold did extremely well to hold around the $1,200/oz floor,” the report pointed out.

But, now, as 2019 approaches, many of the downward drivers that pressured gold this year are dissipating, the analysts added.

“With increased volatility and geopolitical risk, macro asset allocation is becoming more gold positive again, while we believe much of the USD upward move is now behind us with rate hike expectations dropping,” they wrote.

One negative factor for gold prices next year could be a lack of physical demand from emerging markets, the bank forecast noted.