GOLD FORECAST TALKING POINTS:

• Gold price outlook for next week is neutral as uncertainty surrounding the Fed and US-China trade deal leaves risks balanced
• USD may turn higher if Fed walks back its recent dovish position or markets witness further deterioration of the Eurozone’s economy
• Any resolution or positive development over the trade war could bolster sentiment, but may also push USDCNH lower if the offshore Yuan rallies

Gold was able to recover over the last 5 days of trading after incurring losses in the prior week. The gains in Gold this week came from Friday’s nearly 1.5 percent surge in the commodity, likely attributable to weakness in the US Dollar.

SPOT GOLD PRICE CHART: 5-MINUTE TIME FRAME (JANUARY 21, 2019 TO JANUARY 25, 2019)

Gold could have been pushed higher with help from chatter at the 2019 World Economic Forum held in Davos, Switzerland. At the conference, some global leaders painted a dim picture about future prospects as several geopolitical threats steer investors towards anti-risk assets.

Looking ahead to next week, markets will closely turn their attention to the Federal Reserve’s first FOMC meeting of the year for insight over the central bank’s monetary policy decisions. If Chairman Jerome Powell echoes the dovish tone Fed officials have been communicating since their last policy meeting, Gold could perform nicely as a lower interest rate environment typically bodes well for the zero-yielding asset. This effect could be amplified if inflation heats up and starts overshooting expectations.

Additionally, China’s trade team will be making a visit to the White House as officials aim to make progress over the ongoing Sino-American trade war. Any positive development is likely to help boost market sentiment and send risk assets like stocks higher. However, if the US and China move closer to an agreement, the offshore Yuan could appreciate against the Dollar which generally benefits gold. Consequently, the outcomes from the Fed’s meeting and US-China trade war talks are likely to dictate which direction the price of Gold moves next.

Also worth noting is the anticipated release of key indicators that were previously delayed due to the US government shutdown. After President Trump announced a bipartisan stopgap funding bill agreement to reopen the government through February 15 today, a slew of economic indicators look to shed light on America’s fundamental backdrop as other countries around the world report disappointing data.