Gold Forecast: Dovish Fed And US-China Deal Needed For Topside Breakout

Justin McQueen


by  Justin McQueen ,  Analyst  

XAUUSD

GOLD PRICE ANALYSIS AND TALKING POINTS:

  • G20 Summit Key for Gold prices
  • Dovish Fed to Buoy Gold

FUNDAMENTAL FORECAST FOR GOLD: NEUTRAL

Another narrow trading range for the yellow metal ($1210-1228) with prices closing lower by 0.3%. The 50 (1215) and 100DMAs (1210) provided support for Gold, while the resistance from the 200-week MA (1233) prevented a topside breakout. Given that there are little signs of an imminent breakout the view for the upcoming week for Gold is neutral.

G20 SUMMIT KEY FOR GOLD PRICES

Gold watchers will be placing a keen eye on the outcome of the G20 summit, particularly on the reports emerging from the President Trump and Xi meeting. While this will unlikely a yield an outright agreement, there could be progress made to warrant further talks, alongside this, a potential truce in the trade war between China and the US could see Gold prices on a firmer footing. However, if talks break down between the two, this could see a move south of 1200.

Next week’s Economic Calendar

Gold Forecast: Dovish Fed and US-China Deal Needed for Topside Breakout

DOVISH FED TO BUOY GOLD

Arguably one of the most important factors for Gold prices next week will be comments from Fed Chair Powell. Recently the Chair had supported Gold prices having provided a rather cautious outlook, whereby he stated that while the US economy is strong, the US could face headwinds going into next year regarding slowing demand and fading fiscal stimulus. Alongside this, the Fed Chair stating that interest rates are just below the broad range of neutral rate estimates (2.5-3.5%). Given that not an awful lot has changed since these comments, it is unlikely that the Chair will deviate too much away from this view.

GOLD PRICE CHART: DAILY TIME-FRAME (APR 2018-DEC 2018)

Gold Forecast: Dovish Fed and US-China Deal Needed for Topside Breakout

Chart by IG

Disclosure: See our 

quarterly gold forecast to learn what will drive prices through ...

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