Gold Price Forecast, Gold prices remained positive traction on Tuesday and reversed a part of the previous day’s retracement slide from a five-month peak.
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Gold prices rebound on Tuesday
What’s Next for the Markets
Gold Soar as Fears strikes the world
Gold prices rebound on Tuesday
The steady intraday ascent extended through the early North American session
and lifted the XAU/USD to a fresh daily high, around the $1,780-$1,781 region in the last hour.
The renewed buying interest coincided with some weakness in the US Dollar Index ahead of today’s FOMC meeting minutes release.
This, along with an uptick in global risk sentiment helped offset concerns
over surging coronavirus cases across Europe and the lack of progress on additional US stimulus measures.
With no major market-moving economic releases scheduled for Tuesday afternoon from either side of the Atlantic Ocean,
Gold prices are likely to remain influenced by developments surrounding
the COVID-19 pandemic as well as broader market risk sentiment trends
before traders start positioning for this week’s key events
especially Friday’s monthly jobs report from the US economy.
Gold prices are on the rise as the US Dollar continues to weaken.
This is good news for investors who have been watching the Gold market closely.
The weaker US Dollar lends support to Gold price, making it a more attractive investment.
With interest rates expected to remain low, Gold is likely to continue its upward trend.
So if you’re looking for a safe haven for your investment portfolio, consider adding some Gold to your holdings.
The US economy continues to defy expectations with strong job growth
and resilient economic activity. The latest ISM Services PMI came in better than expected,
pointing to a healthy economy. This raises fears that the Federal Reserve might lift rates more than projected.
However, investors seem convinced that the Fed will slow the pace of its policy tightening cycle
and only anticipate a 50 bps rate hike in December.
This positive outlook is good news for investors looking to put their money into US assets.
What’s Next for the Markets
While the FOMC meeting is the key event next week, there are other data releases
and events that could also move markets.
Here’s a look at some of the key risks:
US consumer inflation figures for November:
These numbers could influence the Fed’s policy outlook and, in turn, gold prices.
The latest US retail sales figures:
These numbers will be closely watched to see how consumers are spending heading into the holiday season.
Any weakness could spook investors.
Earnings reports from major retailers:
Retailers’ earnings reports will give insight into how they’re faring this holiday season.
Strong results could boost confidence in the sector, while weak results could weigh on stocks.
The economic data from China over the past few weeks have been encouraging,
with manufacturing activity and retail sales both picking up.
However, global equity markets have failed to sustain the initial optimism led by these data releases,
as concerns about a deeper economic downturn continue to weigh on investor sentiment.
Gold Soar as Fears strikes the world
One of the key drivers of this pessimism is the increasing likelihood of a recession in the United States.
The latest data from jobless claims and consumer confidence surveys point to an economy
that is struggling to cope with the impact of COVID-19.
With businesses across sectors cutting jobs and consumers tightening their spending,
it seems only a matter of time before we see a full-blown recession in America.
This growing fear of an American recession is one of the main reasons why Gold prices have remained elevated in recent weeks.
As a safe haven asset, Gold benefits from increased demand when investors are seeking refuge from market volatility
and economic uncertainty.
We expect this trend to continue in the near term as fears about a deepening global downturn continue to underpin demand for Gold.
The bullish bias prompt some technical selling.
This, in turn, could drag the commodity back towards the key $1,750 – $1,747
horizontal-line-support-turned-resistance zone.
Some follow-through weakness below might even take it towards an important Fibonacci retracement level
of $1,737 before the Gold price eventually stabilizes around the mid-$1700s.