Gold price forecast 17 Novemebr 2020

2020-11-17

Gold misses multi-polarity. Forecast as of 17.11.2020Dmitri Demidenko

What will the world be like after the COVID-19? What will the US-China trade relations be like under Joe Biden? The answers to these questions will determine the [XAUUSD][1] trend. Let us discuss gold prospects and make up a trading plan.

Fundamental gold forecast for a year

In 2020, the main factor of forex pricing is pandemic. The victory over the pandemic in 2021 by means of vaccination could take the world back to multi-polarity. There again would be such important factors as economic expansion, monetary policy, and international trade. The first sign of higher importance of factors other than the coronavirus has become the gold’s reaction to Donald Trump’s ban on American companies’ purchases of certain Chinese securities. The ban resulted in sell-offs in the Chinese corporate debt market and sent the Treasury yield down, supporting the gold price rise to $1900 per ounce.

The improvement in the US-China trade relations is the second crucial factor for investors following the victory over the COVID-19. Although the Chinese see Joe Biden as a better partner than wild and unpredictable Trump, the US policy towards China could remain tough. Biden has already announced that the US allies need to negotiate to establish rules for international trade to counter China’s growing influence.

Supposing that the vaccines bring the world to normal life, the world economy is recovering and the US-China trade relations don’t deteriorate at least (at best, Joe Biden could cancel the tariffs imposed by Trump), gold should be between a rock and a hard place. On the one hand, the growth of the global PMI and the rally of Treasury yields will press down the [XAUUSD][1]. On the other hand, the Treasury rates affect gold prices, which you could see on November 9 when gold had the worst daily crash since August. Goldman Sachs has lowered the gold price forecast for 2021 from $1950 to $1825 per ounce, as analysts expect the recovery of global GDP.

Dynamics of PMI and Treasury yields

Source : Nordea Markets

However, the above scenario could suggest the US dollar drop, which is an obvious bullish factor for the [XAUUSD][1]. Citigroup believes that the USD should be 20% down next year. The company suggests the situation of the 2000s should repeat next year. In the 2000s, Chine joined the WTO, which accelerated international trade, strengthened the euro, and weakened the greenback. The median-forecast of Bloomberg experts suggests the USD should be 3% down in 2021. The worst yearly drop of the USD index was 18.5% in 1985.

Dynamics of Gold and USD index

Source : Trading Economics

Gold trading plan for a year

I believe that this scenario doesn’t consider such a factor as the difference between the US GDP and global growth. If the US economy recovers soon, the dollar could stabilize. In addition to the Treasury yield growth, the dollar strengthening will suggest selling gold towards $1800 and $1770. Otherwise, if the euro-area economy performs better, the [XAUUSD][1] will tend to consolidate in the range of 1800-1900. The escalation of the US-China trade war will hinder global economic expansion, strengthening the dollar and sending the gold price down to $1700-$1750.

P.S. Did you like my article? Share it in social networks: it will be the best “thank you” :)

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

I recommend trying to trade with a reliable broker [here][2]. The system allows you to trade by yourself or copy successful traders from all across the globe.
Use my promo-code BLOG for getting deposit bonus 50% on LiteForex platform. Just enter this code in the appropriate field while [depositing][3] your trading account.
Telegram chat for traders: . We are sharing the signals and trading experience
Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders

Price chart of XAUUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Rate this article:

( {{count}} {{title}} )