The stock investors and gold investors are looking for a significant turnaround in this leap year. In 2019, the gold price peaked at $1557, giving strong resistance to stocks and commodities. This is a firm indication that the gold prices will soar in the coming months. The gold price forecast shows better returns in 2020 for sure.
The yellow metal’s prices are primarily affected by various economic trends. As these trends make certain moves, the stock exchange and commodity market fluctuate involuntarily. Simultaneously, volatility affects the gold price. How it affects is something worth to watch out for.
Let’s have a look at the latest trends that may affect the gold price in 2020.
Volatility in U.S. Dollar
There is higher volatility experienced in the dollar value in the past few months. Both the Bank of Japan as well as the European Central Bank have shown strong support to the U.S. dollar at the expense of gold.
Despite a slowdown in the economy, the U.S. should outperform its other large peers. This will keep the U.S. economy headstrong by exercising some downward pressure on the gold.
U.S. Presidential Elections and Trade Deals
The world is awaiting the U.S. elections to be held in November 2020. As there are various trade deals put on hold due to the uncertainty of who will be the next U.S. president. The primary driver of gold’s price in 2020 is the trade war tensions between the U.S. and China.
If Trump is re-elected as the President, the trade deals that were on hold will be put back to work. And this will reinforce the gold value to a new high from the current range of $1500 to $1550.
Slow Down in U.S. GDP Growth Rate and Low-key Inflation Rate
According to the IMF, there will be a slowdown in GDP growth rate. The economic researchers claimed that the rate fell from 2.4% to 2.1% in 2020. And if the inflation rate remains low-key in the coming months, then the gold prices may surge like never before, as per the gold price forecast.
Global competition and technological progress have massive effects on inflation rates. The involuntary movement in inflation is the root cause of gold prices getting affected. But how much influence these factors can cause is incalculable.
Investors May Take More Risks Post Brexit
After the U.K. Parliamentary elections, Brexit came into force on 31st January 2020. This led to an increased appetite for investors and shareholders. Many people are looking for better opportunities to invest at the expense of gold.
With the geopolitical differences and actions, the gold prices did have a drastic impact. But how these political decisions affected the gold price is yet to be studied. But the influence was huge, and it definitely will lead to better economic growth.
Progressively Amassing gold
Many central banks and super-rich nations have commenced reserving gold in huge quantities. Russia is leading in the activity of accumulating gold reserves and deserting the dollar. It mined almost 185 tons of gold in January 2019 and raised the gold reserves to 548 billion dollars.
Likewise, many Islamic nations have also ditched using the dollar as the trading medium. And have given more preference to gold trading after the tough sanctions by the U.S. on Iran.
These trends confirm that there will be a tremendous change in the gold rates in the coming months. And, the prices will increase in unprecedented ways.