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Towards new horizons: gold holds hope for growth

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Gold has been trading in a narrow range - $ 1,450– $ 1,490 per ounce over the past six weeks.

The precious metal, which looked doomed only two months ago after a rollback from a comfortable level of $ 1,500, demonstrates unwavering.

Gold without losses survived three events that were supposed to play into the hands of sellers:

1. Following the December meeting, the US Central Bank decided to leave the federal funds rate unchanged. Precious metal usually strengthens amid falling rates, especially if it is sharp enough and can cause a massive redistribution of dollar positions in favor of gold.

2. In the early parliamentary elections in the UK, the Conservative Party led by Boris Johnson won a landslide victory, which opened the door for the final exit of Foggy Albion from the European Union. Over the past three years, gold has served as a risk hedge against the backdrop of the country's useless attempts to leave the EU.

3. Washington did not introduce $ 160 billion in new Chinese import duties on December 15. This year, the trade war between the US and the Celestial Empire influenced the dynamics of gold, as the precious metal to a greater extent than the Fed and Brexit - along with the US dollar - which was used for hedging risks associated with the conflict of two world powers.

Can there still be a rise in prices before the end of the year?

According to experts, the fact that gold did not crash against the backdrop of these events makes it the absolute winner and raises the question: is the precious metal preparing for the latest increase in 2019? Does it have enough strength and endurance to get to the $ 1,500 mark?

According to statistics from recent years, there are no significant events in the gold market from the middle to the end of December. However, the cost of precious metals increased in December by 4% at the end of last year.

At the same time, some investment companies will buy assets by the end of the year in their portfolios that have shown good growth dynamics during the year. Gold is one of those. Thus, this will become a supporting factor for precious metals.

However, even without rising to the level of $ 1,500, gold is preparing to complete the current year with an increase of 15%.

What to expect from precious metals in 2020?

"Gold retained its shine, because the Fed's reaction to the incoming data remains asymmetric: the regulator will either lower rates in the event that US economic growth disappoints or maintain its current rate if the latter recovers, which ultimately will continue to exert pressure at real rates. This strengthens our opinion that gold growth will continue in 2020, "said representatives of TD Securities.

ABN Amro experts believe that in 2020 a favorable situation will develop for gold.

"Weak economic growth in the eurozone and a slowdown in the US economy will be important factors in supporting precious metals. In addition, the volume of government bonds with a negative yield will increase, which will also positively affect the value of gold." they said.

According to the forecast of ABN Amro, in 2020 the average price of gold will be $ 1,500 per ounce, although it can rise to $ 1,575 in the 4th quarter.

"Next year, smart money will continue to sit in gold as insurance, as there will be many disappointing factors in the global economy," says Mitsubishi Bank.

"We still see growth potential in the gold market, as increased political instability and economic problems will be the main supporting factors for the price of gold." analysts of Goldman Sachs said.

"Gold cannot fully replace government bonds in the investment portfolio, but to have up to 10% of precious metals has always been, is and will be a reasonable decision" they added.

As a result, the bank expects that the price of gold will rise to $ 1,600 per ounce over the next 12 months.

The material has been provided by InstaForex Company - www.instaforex.com