Don’t waste your time – keep track of how NFP affects the US dollar!

Data Collection Notice

We maintain a record of your data to run this website. By clicking the button, you agree to our Privacy Policy.

facebook logo with graphic

Join Us on Facebook

Stay on top of company updates, trading news, and so much more!

Thanks, I already follow your page!
forex book graphic

Beginner Forex Book

Your ultimate guide through the world of trading.

Get Forex Book

Check Your Inbox!

In our email, you will find the Forex 101 book. Just tap the button to get it!

FBS Mobile Personal Area

market's logo FREE - On the App Store

Get

Risk warning: ᏟᖴᎠs are complex instruments and come with a high risk of losing money rapidly due to leverage.

76.5% of retail investor accounts lose money when trading ᏟᖴᎠs with this provider.

You should consider whether you understand how ᏟᖴᎠs work and whether you can afford to take the high risk of losing your money.

GOLD: outlook for 2020

GOLD: outlook for 2020

Information is not investment advice

Intro

Typically flourishing in the troublesome times, gold may seem to be among the last items worth investing in 2020. With the US-China trade deal on the way and global economic growth slowly picking up the pace, investors may lose interest in the precious metal, the traditional safe haven. Or will they not? Let’s have a look at how gold has been performing until now and investigate the factors for its price action in 2020.

Long-term

The first look at the monthly chart of gold shows that things did not change much over the course of the last 20 years. Indeed, a powerful upsurge to a historical region of $1900 per ounce followed by a comparable downturn is dominating the entire picture.

XAUUSDMonthly.png

However, when we connect the lows on both sides as indicated on the chart, we see that the inflated price growth in 2008-2011 was corrected by the following decline in 2012-2015. And now, the price is continuing exactly the same trend line it left when the global crisis stroke the world at the end of the previous decade.

Hence, if we extrapolate the observed long-term trend, it will be safe to assume that the gold price will keep rising in the observable future. Consequently, $1900 per ounce will be reached, sooner or later. Now, if it happens exactly sooner or later, we have to observe factors of local influence.

Gold and the US-China trade war

As we mentioned, gold is a safe-haven commodity, which enjoys a higher demand in times of global turmoil. Hence, this higher demand for the precious metal drives its price up when the economic outlooks become grim. That can be proved by one of the most notable failures of the global economic process – the US-China trade war.

On the daily chart below, we have the entire stretch of the US-China trade war. As a strong negative influence factor for the global economic environment during the last two years, it had its inflating impact on the price of gold. Namely, having started at $1300 at the beginning of the year, the price eventually rose to the area of $1500. Hence, the trade conflict was indeed a strong reason for the price of gold to gain 15% over the course of almost two years.

XAUUSDDaily USD-CHN.png

Therefore, strategically, economic turbulences do indeed force the gold price to grow. However, “strategically” is crucial here. From the trader’s point of view, tactical analysis is as important as it reveals where exactly to enter the market. And here, gold does not show a direct response to the global turmoil.

The green zones on the chart correspond to the fiercest opposition between the US and China in the course of the conflict. As we can see, they do not indicate a straightforward uptrend in the price. Rather, we see quite an inconsistent and somewhat lagging behind general correlation to how the trade war was developing. Still, the overall reaction is clearly visible: the worse the global economic situation, the better for gold price.

In this case, what are the predictions for 2020, in view of the pacified moods of the US and China, and an improved global outlook?

Gold in 2020

Many financial observers expect gold to become more expensive in 2020. While some predict a very moderate advance by $50 per ounce and others suggest a $100 rise to $1600, there are many who forecast a stronger uptrend. However, the median is an average-to-strong performance of the precious metal in the coming year. And there are factors for that.

First, although the whole world appreciates American and Chinese efforts to stop fighting at least on the New Year’s Eve, we still do not have that on paper. Obviously, it is incomparably better than outright mutual threats, but the strategic picture of the relationship between the two is neither optimistic nor documented.

Second, the 2020 presidential election in the US is a big question. Indeed, knowing the contradictive reputation of Donald Trump among the Americans, we can hardly be sure that he will have a guaranteed re-take of the White House next year. Hence, we can hardly be sure that the recent victories of the US-China relations will not be undone in November 2020.

Third, so far the US economy has been “in a good place”. Will that stay the same in 2020? We cannot guarantee that either, despite certain positive indicators being reported from time to time.

Moreover, there are notable de-dollarization trends voiced out more and more all over the world. While some countries directly suggest barter or gold-based exchange instead of USD, others keep increasing their gold reserves, implying a similar possibility. And that is taking place in a world which is no longer dominated by the US economy, and where the number of dedicated US allies is hardly increasing.

All of these factors work to tilt the global reserve asset choice in favor of gold and keep it in strong demand.

Conclusion

The new year starts in less than one week. And the economic and political ambience is unusually calm compared to the tensions we already got used to in recent years. But let us not be charmed by this silence. Although on a positive note, it may be foreshadowing another storm. In any case, gold is unlikely to lose in value in 2020. Hence, buying it now appears to be a healthy addition to the larger trader’s portfolio.

Before you go

In most trading terminals, gold is marked as "XAU". To find the gold-to-USD pair in MetaTrader, you need to right-click anywhere in the "Market Watch" window, choose "Symbols" menu and go for "Metals" section - "XAUUSD" will be the one you need. And remember to keep yourself updated with the news of the Forex market.

                                                                                                 LOG IN

 

Similar

How to Stay Calm and Trade on Uncertainties

Despite the negative news and worrying headlines, we recommend traders to make mental reframing of the situation. This way, you can look at the market from a different perspective. Let’s observe how you can take advantage of the uncertainties and make the fundamentals work for you!

Popular

Gold isn't saving investors from inflation

Many investors treated gold as a protection against inflation. However, last week, gold lost its major support and dropped despite rising inflation. Why did it act like this?

Bitcoin Skyrockets Ahead of ETH Merge and US CPI Release

First, "ETH merge" Google requests are on the rise. At the same time, "buy ETH" requests are at their two-year lows, which is quite a negative factor ahead of the vast update. The community either doesn’t believe in the success, or they are following the "buy the rumors – sell the news" rule and waiting for the massive dump after the merge.

Choose your payment system

Feel the Team Spirit

Callback

Please fill in the form below so we can contact you

Select the best time for us to call you. We give calls from Monday to Friday in suggested intervals. In case we couldn't get through, we will try again at the same time the next day. For getting real-time assistance, use FBS chat.

We provide only English-speaking callbacks. If you prefer any other languages, contact the support team.

We will call you at the time interval that you chose

Change number

Your request is accepted.

We will call you at the time interval that you chose

Next callback request for this phone number will be available in 00:30:00

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later