Gold continues rising in price in the frames of an uptrend since autumn 2018. Such a rise in price was quite expected on the market and forecasts about the price growth to the level of 1300+ dollars happened last year, repeatedly. However, the incentives for growth were somewhat different from those mentioned in those forecasts.
Gold has traditionally risen in price as the demand for safe assets increased and the USD weakened. However, no one could have expected that the main negative factor for the USD would be the shutdown of the US government, following the confrontation between Donald Trump and the Democrats. The US economy, which showed rapid growth last year, is under threat nowadays. The risks of economic downturn in 2019 have increased significantly, and the trade conflict between the US and China no longer has a positive impact on the value of the USD, but reduces investors' interest in risky assets. Also, the FED's aggressive monetary policy no longer stimulates the USD to grow, but on the contrary - the recent increase in interest rates caused a fall in the US stock market and had a negative impact on the US currency. Thus, this is a situation only in favor of Gold.
This week is the most volatile in January. The market received important macroeconomic reports about the US economy: the manufacturing PMI index of business activity and data on unemployment in the non-agricultural sector is expected. Also, investors are waiting for the outcome of negotiations between China and the United States, while the probability of achieving some deal reduced. The US is putting forward more and more claims to the leading Chinese companies, which is more like the fight against competitors to American companies.
The failure of the next round of negotiations will cause another increase in demand for safe assets on the market, which in the medium term makes the deals on the trend the most effective. At the same time, the oscillators (Stochastic, MACD, RSI), unanimously indicate the rates in the overbought zone. So in the near future, there is a high probability of a price correction, which means that the deals to SELL will be most effective in the short term. The rates can drop to $1,300, after which they will continue rising again.
