Numerous factors converged towards the end of 2018 and sent gold soaring towards a six-month high.
Despite ups and downs in the second and third quarters, Newsmax reports that gold rebounded to end 2018 on a stronger note than most other assets. Numerous factors converged towards the end of the year to send the metal soaring towards a six-month high.
According to the Newsmax article, a key among these has been the escalating trade war between the U.S. and China. Although gold didn’t immediately react to tensions between Trump’s and Xi’s cabinets, the ramifications of the back-and-forth tariff battle came into prominence as the year drew to a close. With concerns that Xi could maintain his hardline stance for the duration of President Trump’s current term, the conflict is likely to keep sending shock waves across the market throughout 2019.
The threat of a government shutdown in the U.S. materialized on December 22 as Congress members found themselves unable to reach a budget consensus. While it’s unclear how long the shutdown may last and how hard its effects will be felt on the economy, President Trump recently warned that the shutdown could last for months or even years in the absence of a sound agreement.
The article states that the uncertainty surrounding the situation and the negative implications for both citizens and state were another contributor to gold’s price jump.
In the weeks leading up to the shutdown, the U.S. economy faced other hurdles as analysts pointed to signs of stagnant growth in the near future. For most, the biggest talking points have been the equity market’s plunges after years of record-setting performances. According to the article, many found it particularly concerning that previously robust tech stocks, such as Amazon and Apple, experienced some of their worst losses ever during this stretch.
Government officials have by and large dismissed these red flags as mere flash crashes, but worries persist that the stock drops could be a harbinger of another recession.
Moving into 2019, Newsmax reports that gold faces a favorable landscape free of several headwinds that kept the metal down the previous year. Jingyi Pan, market strategist at IG Asia, pointed to the expected easing of the Fed’s hiking policy as perhaps the metal’s most bullish driver this year.
Having hit $1,280 an ounce in December to post its best monthly gain in almost two years, the metal looks to make the most of reignited safe-haven demand as it heads towards the next resistance level. Benjamin Lu, an analyst at Phillip Futures, lists $1,309 as the next breakout point for gold, adding that strong haven demand is sure to persist for the remainder of the quarter.
According to Newsmax, other precious metals have come out with strong performances of their own. Silver jumped by more than 9% over the past 30 days amid calls that the metal is severely undervalued and slated for an upwards correction. Palladium likewise rounded up its third consecutive year of gains amid a notable spike in demand.