Gold has been looking fairly positive over the last ten days or so, but will it continue on this path as we come to the end of the calendar year?
The Curse of December
Over the last few years, December has not been a particularly kind month to gold - with the pattern showing that the price seems to hit annual lows each year during this month. However, this year is seemingly looking different. Even with the strong U.S. Dollar, gold has been doing well since September, and this sign of strength where there could usually be a weakness may be a good sign for our favourite precious metal.
The USA & The UK
Over in the USA, the Federal Reserve’s monetary policy decision scheduled for next week may have a big part to play and could be an opportunity for gold this month. U.S. equities appear to be in decline. Some of the blame for this appears to be President Trump’s trade war with China, which appears to have backfired, as well as the arrest of China’s Huawei Technology’s CFO’s daughter, who could possibly be facing accusations of breaching US sanctions with Iran. America’s trade deficit looks to be growing ever wider.
Here in the UK, the economy is slowing. At the end of last week, the FTSE 100 index was down following reservations in international banking, and fell steadily until it reportedly hit it's biggest drop in 3 years.
Today, we have the news that the European Court of Justice has ruled that the UK can cancel Brexit without the permission of the other EU members. This comes just a day before UK MPs were due to vote on Theresa May’s proposals, which were widely expected to be rejected. The vote now looks to have now been delayed.
Also in the news today, we see that car sales have fallen here in the UK, and the manufacturing sector has stalled. Trading conditions for UK exporters are deteriorating due to moderating global growth and all of the uncertainty over Brexit.
Is the Future Golden?
With the concern of a possible looming recession, low confidence in the world economy, as well as the continuing Brexit negotiations, could this mean a possible upturn in safe-haven demand for gold?
As we know, it’s never that simple when it comes to bullion! Although, we do know that the status of gold and silver as safe-haven assets mean that anything that changes towards either panic or unease, can usually push the demand and price for precious metals upwards.
All we know for sure is to keep our eyes and ears open because – as always – only time will tell.
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.