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Price of Gold Fundamental Daily Forecast – Weak Dollar Driving Force Behind Gold’s Strength

By:
James Hyerczyk
Published: Dec 31, 2019, 10:47 UTC

Gold prices are set to post their best year since 2010, having gained about 18%, mainly driven by a tariff war between the world’s two largest economies and quantitative easing by major central banks.

Comex Gold

Gold futures surged to their highest level since October 3 early Tuesday on the back of another plunge in the U.S. Dollar. A weaker dollar tends to drive up demand for dollar-denominated gold because it makes it more attractive to foreign buyers.

The dollar is weakening because investors are dumping greenback positions placed as hedges against an escalation of the U.S.-China trade war. The dollar has been plunging since the two economic power houses reached Phase 1 of their trade deal on December 13.

At 10:30 GMT, February Comex gold is trading $1525.90, up $7.30 or +0.48%.

U.S.-China Trade Relations

Investor sentiment has largely improved in December with the U.S. and China recently reaching an agreement on a phase one trade deal.

The South China Morning Post, citing a source, reported Monday that top Chinese trade negotiator and Vice Premier Liu He is set to visit Washington this week to sign the phase one deal with the U.S.

Beijing has accepted the U.S. invitation for a deal signing in Washington, and the Chinese delegation will stay in the U.S. for a few days until the middle of next week, according to the report.

Other News

Speculators raised their bullish positions in COMEX gold contracts in the week to December 24.

China’s net gold imports via Hong Kong in November plunged 72% from the previous month to their lowest in nearly nine years, data from the Hong Kong Census and Statistics Department showed on Monday.

Daily Forecast

Gold prices are set to post their best year since 2010, having gained about 18%, mainly driven by a tariff war between the world’s two largest economies and quantitative easing by major central banks.

With the Fed likely to hold rates steady in 2020 and the Reserve Banks of Australia and New Zealand expected to delay future rate cuts, gold gains may be limited over the near-term. However, it all depends on what happens with the U.S. Dollar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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