Time to buy gold will arrive soon

So far this week looks good for gold as we saw its prices edging higher in Thursday In Asia and it traded near a 5 month high amid U.S. yield curve inversion.

The yield curve inversion triggered concerns about economic growth and a dollar sell-off recently. The two-year/10-year spread was at its flattest this week in more than a decade amid a sharp fall in long-term rates. A flatter curve is seen as an indicator of a slowing economy.

Any slower pace in the economy adds to negativity in growth. This has put pressure in the dollar and further strengthened gold prices. The greenback came under pressure last week when the market took comments from Fed chairman Jerome Powell as signalling a slower pace of rate hikes. Markets still expect the Fed to move forward with a quarter-point hike this month but have interpreted cautious remarks from policymakers to mean that further tightening in 2019 will have to be re-evaluated on economic and inflation data and hence the pull in prices has not been that high.

Furthermore, uncertainty prevails in the market over the upcoming Federal Reserve policy decision, as the Dec. 18-19 meeting looms just over the horizon.

On Wednesday gold hit a high of $1243 an ounce and plunge back to $1233. Though we have gold price moving up this year but the trading range has been sideways because it doesn’t stay at the peak for a long time.

Hence it has been containing most of the price especially since the 11th of October, between 1212 and 1243.  Gold bulls will need the Fed to halt its raising interest rate programme to see a major reversal in the price of gold. Once the Federal Reserve ends the tightening cycle, the time to buy gold will be near

So we can say that if the bulls keep running for gold then it will pick momentum from ere and will be seen crossing the $1243 territory and hopefully cross the July highs of $1257 an ounce.

The coming year looks positive for gold because the dollar is expected to weaken, US treasury yield might be lower, Chinese Yuan expected to recover and demand for jewellery predicted to rise.
And if all falls in place for the bulls then one wouldn’t be wrong if he expects gold to touch the $1400 level.

Will gold witness an upward trend soon

Gold was following a wave like movement during the week as we saw it moving up till Thursday and then diving down by the end of the week.
Gold edged higher for the second consecutive session on Thursday and was placed at the top end of its weekly trading range, around the $1227-28 region during the trading hours.

Spot gold has stood strong against a weaker dollar, with the precious metal’s spot price hovering at around $1228 – one of the highest levels it has seen since 11 November where it hit $1230 per ounce.

The Fed Chair Jerome Powell's comments that rates are just below the neutral level now triggered a broad-based US Dollar weakness and prompted some short-covering trade around the dollar-denominated commodity. This weakness further strengthened the yellow metal and pushed prices higher.

The USD bearish pressure now seems to have abated, though expectations of a slowdown in interest rate hikes, reinforced by sliding US Treasury bond yields, kept pushing the non-yielding yellow metal higher through the mid-European session on Thursday.

Even the prevalent positive mood around European equity markets, which tends to undermine demand for traditional safe-haven assets, did little to prompt any fresh selling around the precious metal or stall the ongoing positive momentum.

The price of gold shot up on Thursday, following Bank of England statement (on 28th November), in which the BoE forecast the UK economy’s performance in the face of the various Brexit outcomes and warned of serious economic contraction with any ‘No Deal’ Brexit.

But post the U.S. data released on Friday, the dollar which was lying flat, gained momentum. Reports released were above expectations and this strengthened the dollar thus pushing gold prices down.

Further, Gold prices fell in the domestic markets too. Investors took this dip as an opportunity to buy. The appreciating (Indian) rupee has brought down prices. At this price level, jewellers and retail buyers are quite comfortable in making purchases.

Local gold prices were trading near their lowest in about three months as an appreciation in the rupee made overseas buying cheaper. Physical gold demand in the world’s second biggest bullion consumer India got a fillip this week from a slide in local rates due to gains in the rupee, while buying was steady in other top Asian hubs.

Though gold hasn’t shown an eye catching gain, it still holds importance in the portfolio of many. If we see closely, gold has been falling since the past seven years. It’s down by more than a third over that period. So clearly, the metal is cheap and makes itself more appealing as a safe haven asset.

The precious metal has been in free fall most of 2018, losing roughly 11% of its value since its January peak. And this year's performance is a continuation of the longer-term trend.

Gold has slowly been trending higher since August. The metal is up a little more than 3% since then. And prices appear to be hitting what analysts describe as "higher lows."

Gold prices have been falling for years. Investors recently hit their most extreme negative sentiment levels in nearly two decades. And now, the price is starting to move back up.

With investors now pricing in only one more rate hike in 2019, markets feel positive for gold and hence it has once again found acceptance in an investment portfolio. Will we see gold in an upward trend soon? Well the answer lies in 2019 as 2018 is about to end and which a holiday mood in the air markets are not expected to be much volatile in the coming days.