Gold: Worst- & Best-Case Scenarios in 2019

New York (Dec 19)  The Fed has increased the interest rates three times so far this year and another rate hike is firmly on the cards when the Fed meets on Wednesday. Another hike will push the interest rates in the U.S. to their highest level in a decade. These interest rates hikes have pushed the dollar index towards its peak point (97.71) for the year. In other words, the dollar index has had one dominant trend this year- the uptrend.

The greenback and gold have an inverse relation. The reason we have not seen strength in the inverse relationship between the yellow metal and the dollar is mainly because of the feeble world economic growth. The tumult in Paris, the Brexit chaos and the trade war between Washington and Beijing have crippled optimism among investors.

Going into 2019, the yellow metal is likely to shine more as cracks have started to surface in the U.S. economy. The U.S. equity markets are on track to record the worst performance in a decade. Trump can no longer brag about this. The housing market, a leading indicator to gauge the economic health of the country, is showing some serious concerns.  Business investment has dried up in the third quarter and effects of tax cuts by Trump administration have almost vanished.

Forbes