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Will Gold Price Increase By The End Of 2020?

Monday 09, 12 2019
It can be said that from the beginning of December, gold prices met many structures. The chart of the gold market fluctuated continuously, with many ups and downs, making many investors struggle.
Will Gold Price Increase By The End Of 2020?

A golden week full of volatility

After three months of falling to the bottom, world gold prices soared when US President Donald Trump repeatedly warned trade partners, from China to the EU, Brazil, and Argentina.

Accordingly, President Donald Trump introduced the possibility of delaying a trade deal with China until the 2020 election. This has turned up all expectations to make the stock market fall and push the gold price up.

As of mid-day on December 4 (Vietnam time), the US stock index traded 85 points (0.3%) lower, while the S&P 500 futures contracts fell 0.3% and Nasdaq 100 fell 0.4%.

Safe-haven assets have risen sharply, including gold and bonds. 10-year Treasury yield fell five basis points to 1.79%, while gold futures prices rose to a two-week high of $ 1,476 an ounce.

World gold price for immediate delivery started the second session on 12/12 at 1,467 USD / ounce. And the highest point was on Wednesday 4/12, the price of gold ever hit a high of 1,483 USD / ounce.

However, the global and domestic gold markets did not have a chance to receive happiness, as soon after, the gold price dropped deeply because of President Donald Trump shared the 'goodness' of trade negotiations between the two sides making the gold prices plummet, resulting in investors being "bewildered" because of this sudden change.

And yet, shortly thereafter, information from the US November job report had a strong impact on the price of gold, causing the price of gold without 'leverage' to boost the price of gold, while gold continued to plummet strongly.

The US employment report shows that the economy generated 266,000 jobs - the largest increase in 10 months. This made investors worried about the possibility of a further interest rate cut - the factor that helped gold increase during the summer.

For the domestic gold market, it is not outside the strong fluctuations of the world gold market. From the beginning of December, the domestic gold price has been closely following the adjustment and increase steps of the world market, but the adjustment band of the domestic gold market was quite conservative.

After turning back to nearly VND41 million / tael, the domestic gold price rebounded from December 3. Accordingly, in the opening session on December 4, the domestic gold price increased by VND 100-150,000 / tael, and on December 5, the domestic gold price continued to gain momentum with a smaller adjustment margin.

However, the domestic gold price only "climbed" for 2 sessions. During the Friday trading session (December 6), the gold price showed signs of slowing down and then dropped sharply at the end of the week (December 7).

When will gold increase to 1,550 USD / ounce?

By this time, there are many mixed opinions when forecasting the price of gold. Accordingly, some Wall Street analysts expect strong labor market data to put pressure on gold prices next week.

Meanwhile, Kitco News's latest weekly gold survey of 16 market analysts who participated in the survey said: 4 analysts, or 27%, said they were optimistic about the gold prices next week. 7 analysts, accounting for 44%, gave lower price forecasts. Five analysts, or 31%, viewed prices as neutral.

Meanwhile, 792 respondents participated in the Main Street online poll. A total of 487 voters, or 61%, called for gold to rise. 183 votes, accounting for 23%, predicted gold will decrease. The remaining 122 voters, or 15%, expect the market to move sideways next week.

Gold price survey week
Gold price survey week 9-13 / 12. Source Kitco

The psychology of retail investors rebounded sharply from a 6-month low last week when only 44% considered gold to increase for the current week.

Looking ahead, with uncertainty, Wall Street analysts continue to see a quiet market as prices remain stuck between support at $ 1,450 per ounce and resistance at $ 1,500 per ounce.

Fawad Razaqzada is a technical analyst at City Index. The expert said that although gold prices could move lower in the near future, he is optimistic about the precious metal. However, he added that because the metal is still within the range, prices could see a short-term recovery in the lower band of the channel.

Afshin Nabavi is the head of MKS (Switzerland) SA trading, saying that he does not expect gold to break out of the current range. He added that even if the good momentum in the US labor market pressures gold in the near future, there is still enough uncertainty to support gold.

“Investors will continue to buy and sell based on trade war news. But because of all uncertainty, I still prefer to invest gold with buy orders” he said.

Recently, in an interview with Kitco, Ms. Chantelle Schieven, head of research at Murenbeeld & Co, hoped that the price of gold could rise to around 1,550 USD / ounce by the end of 2020, due to uncertainty about geopolitics around the globe.

"Geopolitical instability threatens global economic growth, and major central banks will be forced to keep interest rates low, but at the same time, they must pump liquidity into financial markets, which will cause inflation. With the increase and the devaluation of the currency, gold will thus benefit from becoming more attractive, "said Chantelle Schieven.

Meanwhile, Daniel Pavilions, senior cargo broker at RJO Futures, has the opposite view. Experts say that the stronger stock market will hold gold prices in the near future. He added that he himself is considering the 200-day moving average of the yellow metal close to $ 1,420 per ounce.

According to some analysts, the US labor market growth in November with 266,000 jobs created - the largest increase in 10 months - will continue to boost the stock market and weigh down on safe shelter assets like gold.

"Friday's surprisingly strong employment report is a tightening band around our favorite metal neck - at least in the short term," said Richard Baker, editor of the Eureka Miner Report. "I think there is a good chance the stock market momentum will continue next week and the yellow metal will stand at $ 1,450 an ounce" he said.

Categories:
Banking & Finance

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