FiboGroup Market Analysis 2019

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Analysts are divided on the direction of the gold price this year with some saying there is plenty of life left in the current rally while others believe that a fall of up to $300 is a real possibility.

Analysts from Goldman Sachs are one of the camps who believe the precious metal has more room to travel higher on the back of growing interest from Central Banks and expectations that the US Federal Reserve may be nearing the end of their current rate hiking cycle


"Going forward gold will be supported primarily by growing demand for defensive assets. The same is also true of central bank buying, with rising geopolitical tensions incentivizing more central banks to re-enter the gold market," said Jeffrey Currie from Goldman Sachs


"The last few weeks have seen a sharp deterioration in risk sentiment following soft macroeconomic data in December and renewed concerns about the future direction of growth, particularly the risk of U.S. growth catching down towards weaker economies," he added.


One of the few analysts who think gold will tumble is vice chairman of Blackstone Private Wealth Solutions vice Byron Wien as investors realize the economy is not as in bad shape as many thing and they begin offloading gold due to its inability to generate any yield.


“That’s a real surprise of 2019, gold will drop to $1,000. My thinking is that gold has been in a consolidation period for about four years. Everybody thinks if it breaks out of its trading range, it is going higher. We think it’s going lower. And why not? A lot of people don’t think gold is going anywhere and almost nobody thinks it’s going down.” Mr Wein said


“If the market is doing well, if interest rates are around 3%, there’s a real cost to holding gold. Not only does it not have any yield. But, you have to pay for storage and insurance. Investors are going to realize that gold is an unattractive asset and the price will drop,” he added.
 

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The British pound has started the week in the Asian session with little movement as traders await the latest Brexit movements .

British Prime Minister Theresa May returned from Brussels over the weekend having tried to persuade the EU to reconsider the current Brexit deal which has been brokered between the 2 parties which some say is unbelievable as the EU have steadfastly said they will not budge from the current deal.

Now May must find a ay to convince her Parliamentary collogues to reconsider the deal they strongly rejected last week which many also say will be a tall order.

The the EU is refusing to reopen the Brexit deal, and the question of whether May can persuade opponents in Westminster to support a new deal also has to be questioned following the events of this week. As a consequence markets may be too sanguine about how things will develop from here," says Timothy Fox, Head of Research & Chief Economist at Emirates NBD.

The pound soured last week after the humiliating defeat by the British parliament for Prime Minister May’s Brexit deal as rumours spread that the a majority of Parliamentarians were united in a soft Brexit which would save Britain crashing out of the EU.

There is a chance that the March deadline for Britain to leave the EU could be extended but many say this will only delay the inevitable.

The thing that has been forgotten here the British Public voted for exactly that, a Brexit with a clean break from the EU with no strings attached and with that in mind, it could eventually come down to delivering the result the people wanted which is a hard Brexit and if this scenario gathers steam the British pound is in for a rough time

"We understand that so many domestic and international parties in this process don’t want a 'no deal' scenario, but right now we cannot see a clear path towards preventing one. We would assign the scenario which sees Article-50 extended with a path towards new elections the remaining 55%," says Stephen Gallo at BMO Capital Markets.
 

fibogroup.com

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The Australian dollar is looking vulnerable and is headed back below US70c according to some analysts as the reserve Bank of Australia is forced to cut interest rates to breath some life into the economy and push inflation to within their preferred target rate.

Over the last few weeks we have seen a range of disappointing data from Australia such as poor GDP figures and inflation numbers which has caused the RBA to change their tone in recent speeches by adding the option of a rate cut to the table.

This is a stark change from only one month ago where the RBA whre preparing the market for a rate hike later in the year.

While the risks around a deterioration in the external environment, particularly China], appear to have receded for now, this may be masking the growing risks from the second, which is gathering momentum and deserves more attention,” said HSBC Currency Strategist Tom Nash

“This includes a weaker-than-expected Q3 GDP print, the biggest monthly drop in surveyed business conditions since the Global Financial Crisis, a 22.5% year-ended fall in building approvals and monthly retail sales that turned negative in December, confirming two soft quarters of consumer spending,” he added.

Any potential rate cuts from the RBA are going to have dire consequences for the Australian dollar as it would make Australia have one of the lowest interest rates which will see yield chasing investors exit the currency in droves.

This will see the Aussie dollar hit levels not seen in a long time

“Our forecast remains for AUD/USD to trade down to post-crisis lows of 0.6600 by year-end.” Mr Nash added.
 

scott11

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Oil is again in the spotlight. After a short term reversal from $45 it has reached short term resistance level at $55. I can’t be sure if this level can be breached, but if not, new rally is ahead. Is anybody trading oil? I would like to share opinions on future price moves
 

Esannniki12

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By my opinion, political uncertainties are going to continue during this year (i.e. Brexit, US-China trade war), with negative impact on economies of affected countries. As this doesn’t have one-off effect, its consequences will be revealed in time.Having this in mind, price of Gold can only go up
 

Esannniki12

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I would say be careful not only of the pounds recent gains, but be generally careful with pound during whole year. I am regularly following news on Brexit development, and don’t like increased use of “hard-exit” words in texts
 

Notati

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115
Price rally during the end of last year was really hard to watch let alone to trade. I am hoping that these times are not going to happen again. As market is stabilised a current prices, it might be good time to consider long position again
 

Olieng38

Sergeant
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130
So the situation here is pretty much the same as during the last crisis in US. Economists are saying that there are further potentials rates cuts and traders have nothing good to expect. The situation probably will remain the same until the end of this year.
 

fibogroup.com

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The gold price is under further pressure in today’s trading session as investors ponder the chances of another rate hike from the US Federal Reserve after the release of bumper GDP numbers from the US.

Most analysts had been expecting a figure of around 1.9% but the final figure that hit the market was 2.6% and that has now firmly put the chances of another rate hike from the Fed a real possibility.

Gold had benefited immensely over the last month as investors exited the US dollar in favor of the precious metal after believing the Fed was done with raising rates which meant the Greenback had lost its appeal as a yield bearing asset.

If the belief of higher rates starts to gather some real momentum the price of gold is likely to pull back even further.

According to some analysts, if we look at the gold price over the last several years, it has failed to move much past the current price and it is going to take some big news such as a concrete trade deal between the US and China or a firm commitment by the Fed that further rate hikes are off the table before gold finally make a significant move higher.

“Prices have run up to the top end of the trading range they have held for the past five years,” says Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.

“Without further easing in financial conditions, ramping inflation or stock market volatility, gold prices are likely to struggle at the top end of this five-year trading range,” he says.
 

DaveT

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333
I would say be careful not only of the pounds recent gains, but be generally careful with pound during whole year. I am regularly following news on Brexit development, and don’t like increased use of “hard-exit” words in texts
Totally agree, leave the pound alone unless you enjoy stress!
 
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