Gold Fundamental Forecast: Bullish
Talking Points:
- Gold price notches its first weekly decline in over a month
- US-China trade war developments boosted risk-on sentiment
- Strong US manufacturing data pushed the USD[1] higher despite Fed turning Dovish
The price of Gold[2] has stumbled lower over the last week as risk-on sentiment caused fading investor demand for the precious metal. Since Gold is often looked at as a safe-haven asset that investors can turn to during times of heightened uncertainty, recent stock market optimism and a strong US Dollar contributed to the shiny metal’s 0.5 percent decline since last Friday.
GOLD PRICE CHART: 30-MINUTE TIMEFRAME (JANUARY 11, 2019 TO JANUARY 18, 2019) (CHART 1)
The drop in Gold’s price over the last 5 trading days snapped the commodity’s streak of 4 consecutive weeks of gains. While Gold was trading sideways for most of the last week, price action on January 18 saw a sizeable 0.8 percent dip in XAUUSD wiping out all gains made over the prior few days.
The decline in Gold was attributable to risk assets rejoicing on reports that China may eliminate its trade deficit with the United States[3] in the latest ploy to decelerate the US-China trade war and boost market confidence. The news comes after an interesting week in the financial markets surrounding Brexit drama, the US government shutdown, and mixed economic developments around the world.
Most notably, weaker than expected data out of China led to the country’s leaders stepping up its willingness to support its worsening economy. Chinese officials announced record-breaking liquidity injections and a lowering of the USDCNY fixing from 6.9709 at the
