Phil Carr
The Gold & Silver Club
Gold prices pulled back on Monday after hitting a four-week high, as China’s central bank stepped in to inject $174 billion worth of liquidity into the markets to prevent a major economic disruption from the Coronavirus outbreak.
The People’s Bank of China made the announcement on Sunday in an effort to ease volatility in the financial markets before onshore traders returned to work on Monday for the first time, since the Lunar New Year holiday.
China is facing mounting isolation as countries across the globe introduce travel curbs, airlines suspend flights and governments evacuate their citizens, risking a worsening slowdown in the world’s second-largest economy.
Traders forecast China’s economic growth may drop below 5% in 2020 versus earlier predictions of 6%. Whilst they see growth at just 2.3% in 2020, which would be the lowest rate of increase since the Global Financial Crisis.
Once we get through this ‘Band-Aid Effect’, the reality will kick-in and inevitably spark economic turmoil in China, which is going to spread globally and force a lot of central banks to cut rates – which ultimately presents an extremely bullish scenario for the precious metals.
Elsewhere in the commodity markets, Oil has now fallen almost 15% since the start of the Lunar New Year holidays, with the market getting increasingly worried over the demand impact from the Coronavirus outbreak.
There were plenty of reports last week that OPEC+ were discussing bringing forward their meeting from early March to February as a result of the price weakness. Should this event occur – it will create one of the most lucrative trading opportunities in 2020, traders will not want to miss!
Where are commodity prices heading next? Watch Phil Carr at The Gold & Silver Club review Gold, Silver and Crude Oil with the latest price forecast and predictions:
Trading has large potential rewards, but also large potential risk and may not be suitable for all investors. The value of your investments and income may go down as well as up. You should not speculate with capital that you cannot afford to lose. Ensure you fully understand the risks and seek independent advice if necessary.
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