The prices of gold increased slightly on Thursday, January 2, 2020, as the U.S. dollar fell close to its six-month low.
U.S. gold futures slipped by 0.1% to $1,522.50 an ounce while spot gold prices went up by 0.2% to $1,519.75 an ounce. Spot gold gained a total of 18% for 2019 while the bullion had its biggest annual price growth since 2010.
The greenback was under pressure at the start of 2020 as investors anticipate the end of the economic outperformance of the U.S. They believe that optimism on the trade negotiations between the U.S. and China would improve the growth outlook of the global economy. The dollar fell by 1.9% in December, its lowest level in five months.
On the trade front, U.S. President Donald Trump has announced that the Phase One deal could be signed at the White House on January 15. However, investors and traders are still waiting for the release of the details about the interim agreement.
According to Brian Lan, GoldSilver Central’s managing director in Singapore, the news about the trade deal does not affect the price of yellow metal that much because the first phase agreement has already been considered in gold’s recent pricing. He believes that the key factors for the gold market in 2020 will be the political tensions between the U.S. and North Korea and the pro-democracy protests in Hong Kong. Lan also highlighted the need to watch out for the equities markets which have recently set new highs. But he suggested that a market correction could result in capital flows into the precious metal.
Phillip Futures analyst Benjamin Lu noted that despite the strong rally of the U.S. stock market, the bullion remains bullish. He expects gold pricing to be supported in the near term by bullish technical posturing. Lu also predicts gold to test the $1,540/oz price level.
Meanwhile, investors are evaluating the results of a private survey which reveals an increase in industrial production and business confidence in China. The findings could have an impact on gold pricing in early 2020.