Gold Price Outlook Bearish On GDP Data, US-China Tension, And COVID-19

Gold Price Chart

GOLD PRICE OUTLOOK: BEARISH

  • Gold prices could fall as US-China tensions over Hong Kong flare up once again.
  • US GDP data may amplify selling pressure in XAU/USD as pandemic takes its toll.
  • Fed Beige Book release could spark additional risk aversion, pressure gold prices.

GOLD PRICES MAY SURRENDER TO US-CHINA TENSION

Gold prices may come under pressure as the political fissure between the US and China widens over a familiar and thorny topic: Hong Kong. Beijing is reportedly intending on inserting legal provisions into the autonomous state’s charter. Some of these policies include measures aimed at curbing secession, foreign interference, and sedition.

These policies are coming on the heels of the 2019 protests that drew global attention and widened the rift between the US and China at a time when both were locking horns in a trade war. In response to this recent development, the US senate is planning to introduce a piece of legislation that would sanction Chinese officials and entities that enforced Beijing’s legal incisions.

US President Donald Trump also warned that the US would respond with retaliatory measures if China did anything to curtail protests and democratic movements in Hong Kong. Relations between Washington and Beijing were already shaky amid the pandemic as US lawmakers, including the president himself, hurled accusations against China for their mishandling of the virus.

US GDP DATA MAY INSPIRE LIQUIDATION IN GOLD

Gold prices may face heightened liquidation pressure if the second reading for Q1 US GDP data falls below the -4.8% estimate. If the report falls in-line with forecasts, it would mark the strongest contraction since the 2008 financial meltdown. The shelter-in-place orders implemented by federal and state government has crushed business revenue and consumption.

US GDP Data

The latter also happens to be another key indicator that will be released on the same day. The secondary reading for Q1 personal consumption data is anticipated to show a -7.4% print, slightly less than the previous -7.6 figure. Over 70% of the US economic growth comes from individual consumption, which, in light of double digit unemployment figures, is likely going to get worse before it gets better.

1 2
View single page >> |

Disclaimer:  DailyFX, the free news and research website from IG, is one of the world's leading sources for news and analysis ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.