Gold Monthly Forecast -November 2018

Price of Gold in spot market saw steady growth across the month of October despite subdued price action during the first week’s trading sessions. Geo-Political events and Bearish rout in equity market helped yellow metal gain bull momentum across the month ending six consecutive months of decline in spot market. The first week saw gold trade range bound for majority with price range limited between $1185 & $1208 per ounce. The move above $1200 handle was supported by subdued demand for USD in broad market and retail traders stocking up on short volumes of spot gold owing to yellow metal’s low price and a weaker US Greenback which helped see activity from Asian and emerging market investors. However upside move of gold was limited owing to risk appetite surrounding forex and equity markets among investors across the globe.

Geo-Political Events Helped Yellow Metal Gain Bull Momentum & Break Six Consecutive Months of Bearish Price Action

The second week started on bearish note for gold as the yellow metal fell 1.2% – its biggest one day decline since August 15, 2018. However prices edged up the next day due to Asian stocks hitting a 11-month low over concerns of potential slow down in China’s economic growth which resulted in some investors taking up bargain hunting in safe haven instruments. Gold continues its positive price action and hit a 10-week high owing to worse than expected US CPI & Jobless data which resulted in US Greenback turning dovish in broad market. USD continued its decline owing to US Treasury bonds hitting new highs and IMF’s reduction in growth forecast owing to ongoing trade war woes which helped boost demand for gold as reduction in growth forecast triggered a risk off market sentiment and US Greenback had taken bearish stance which resulting in Yellow metal appearing highly attractive as safe haven instrument to global investors.

Gold traded range bound with bullish bias during the third week as US Greenback continued its bearish decline in broad market owing to news of tensions between US & Saudi Arabia over death of a Saudi Arabian Journalist. Trump threatened Saudi Arabia with sanctions if Saudi Arabia’s involvement was found in murder was journalist for which Saudi Arabia retaliated by commenting that any interference on this matter from US President Donald Trump or US Government would result in Saudi Arabia taking actions to drive up crude oil price. Gold hit a 2½- week high as tensions escalated between US & Saudi Arabia but the upside in gold was limited owing to a highly hawkish FOMC minutes update which revealed that US Fed plans for multiple rate hikes in 2019 and there was high chance of rate hike in December 2018 Fed interest rate decision meet which helped USD gain some breathing space in broad market.

Gold price continues to rise across the fourth week owing to multiple bullish triggers following various news updates on geo-political events resulting in yellow metal hitting monthly high in spot market. Some of geo-political events whose news helped gold price take on bull momentum include Italian budget woes , Brexit Uncertainties, escalating tension between Saudi & US, bearish rout in key equity markets across the globe, worries over outlook for US corporate earnings, Russia’s retort that they would respond in kind if US President Trump carried through with his threat to quit nuclear arms treaty  with Russia and build new nuclear weapons all of which greatly dented the demand for US Greenback in broad market.

Return Of Hawkish Equity Market Put Dent on Gold’s Momentum &Outcome of Sino-US Trade Talks Will Decide the Direction of Yellow Metal’s Price Action

The last week of October saw US Greenback pick up demand in broad market once again owing to renewed fears of Sino-US trade wars as news hit market that US President Donald Trump plans to impose additional tariff on Chinese goods worth $257 billion and this put a dent in demand for yellow metal as China was the top consumer and had highest number of investors/traders who dealt with yellow metal. USD gained additional bullish support from upbeat US Macro data which implied robust growth in US economy and gave equity markets a bullish boost. But Spot Gold managed to close well above $1210 handle; there by ending long streak of bearish decline as spot gold saw four consecutive weeks of bullish price growth in October.
The month of November started on positive note for spot gold as the yellow metal saw activity despite increased risk appetite among global investors owing to subdued demand for USD, but activity was mostly bargain hunting which resulted in gold moving in range bound fashion. Moving forward US Greenback is starting to regain strength in broad market and the week ahead if filled with macro data updates across key markets. Investors are also interested in latest developments of Sino-U.S trade wars as latest news in market is that both US President Donald Trump and Chinese President XI Jinping were positive about coming to a trade deal post a phone call and they are likely to discuss about same during the upcoming G20 summit. The outcome of macro data and trade talks between US & China will set directional bias of the pair moving forward and outcome in trade talks will likely decide the direction of fund flow with positive outcome changing direction of fund flow from both USD and Gold as increased risk appetite in market generally results in investors moving funds safe haven assets to riskier assets, while negative outcome will likely put more pressure on gold but US Greenback could gain bull momentum.