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22.11.201914:56 Forex Analysis & Reviews: The US election may be the main risk for the markets, which will add to the appeal of gold and treasuries

Long-term review

Exchange Rates 22.11.2019 analysis

Morgan Stanley expects the continuation of growth in gold prices in 2020.

"The complete cessation of trade negotiations between the US and China could lead to a recession in the global economy. In this case, the price of gold will exceed $ 1,500 per 1 ounce, "said representatives of the financial institute.

"Even if an interim agreement is concluded, the precious metal will still show greater returns for the current year compared to last year. One of the obstacles to signing an agreement between the two largest economies in the world can be street protests in Hong Kong, which have been going on for quite some time and which have no end in sight." they added.

Therefore, traders should prepare for increased volatility next year, as the US presidential election will be another reason to hedge risks, TD Securities strategists warn.

"Donald Trump could be the first American leader to be impeached by the House of Representatives during re-election." they said.

At the same time, the bank prefers gold and 10-year US Treasury bonds, expecting the Fed to cut interest rates by 50 basis points in 2020, rather than 25 basis points, as the market predicts.

"American treasury bonds look like an attractive hedge, including given the prospect of further easing of monetary policy by the Fed. Such a scenario also implies an increase in the cost of the yellow precious metal." TD Securities experts believe.

They expect to conclude the first phase of the trade agreement between the United States and China, but a comprehensive deal is expected no earlier than a year.

"Unfortunately, 2020 does not promise a respite from turbulence associated with structural uncertainty. Even the easing of tension in the form of a transition from a trade war to a truce only paves the way for a new escalation associated with the next US presidential election. Although in the short term, the upside potential for gold does not look too impressive, the precious metal may rise in price to $ 1,650 an ounce next year." TD Securities said.

Viktor Isakov,
Analytical expert of InstaSpot
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