Top Trade Idea 2019: Long XAU/USD – Gold to Glisten in 2019
A safe haven asset that lost its luster in 2018 looks set to gain back its glisten. After declining 11 percent over the first 8 months of the year, Gold has started to stage a comeback with the commodity back up nearly 5 percent to 1242.30 as of December 14. Previously overlooked as a yield-less investment in a rising interest rate environment, investors may turn back to Gold if global risks materialize. Aside from investors fleeing international uncertainties surrounding political instability and slowing economic growth, a depreciating Dollar and inflation overshooting expectations could bolster bids for the precious metal next year.
With the current phase of the bull market cycle drawing parallels to the 9th inning of a baseball game, a faltering economy could cause the Federal Reserve to pump the breaks on its path to normalization. This looks to occur when other global central banks are geared up to begin their own tightening agendas which may drag down America’s currency making XAU/USD more valuable. Rising wages due to an increasingly tight labor market combining with higher costs from tariffs and a possible infrastructure spending bill bodes well for inflation overheating – thus setting up Gold as a top trading opportunity for 2019.
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