Gold became one of the most profitable assets of 2019, although since September 2019 we have seen a weakening of the uptrend and a significant retreat from the peak. The reason for this was the significant progress in resolving the trade conflict between China and the United States. The growth of gold was caused by an uncertainty in the world economy and the easing of monetary policy in the United States and other key countries.
In December, the market rode on a wave of optimism, receiving positive signals from the US and China about the conclusion of a partial trade deal. This week, the situation has not changed: world stock indices are extremely optimistic and reaching new highs. At the same time, shares are growing rapidly, and gold, despite its status of a safe asset, is rapidly recovering in price, successfully breaking the $1,500 mark. This is actually an unusual and contradictory situation. During waves of optimism, gold is usually under pressure, but not this time: some investors are still skeptical about the end of the trade conflict and expect a real deal and further steps in resolving the trade dispute. Yesterday, Donald Trump promised to sign a deal with China in the first days of 2020. If this happens, we can expect a decline in gold prices in the short term, which can also be considered as another price correction.
A price correction is long overdue. The MACD, Stochastic, and RSI oscillators unanimously indicate the rates in the overbought zone and the efficiency of the deals to SELL. In the long term, the forecast remains unchanged: gold may rise further, at least reaching the level of 1530 dollars in the first half of 2020. We believe that real pespective of the trade deal is not fully taken into account in the price of gold and a short-term decrease in prices may occur right after the end of the New Year holidays.
