Top Trade Idea 2020: Support Central Banks Plus a Big Election Keep Focus on Long Gold

Next year brings another Presidential Election in the United States, and given the outlay of the past three years, it seems almost obvious that President Trump is going to want to stimulate the economy as much as possible as voters go to the polls in November. This has been evidenced through a variety of scenarios in 2019, including both the US-China Trade War as well as the criticism of the Federal Reserve for not being dovish enough, even despite the fact that the bank cut rates three times in the year. So far, the Fed is forecasting a flat year of 2020 with zero rate cuts or hikes forecasted but as we’ve seen recently, that can change very quickly.

For next year, the long side of Gold remains interesting. Gold prices put in a strong showing in 2019, coming in stark contrast to trends of recent years past. After topping out in September of 2011, Gold prices spent much of the next seven years in varying forms of sell-off, watching prices fall all the way from a 2011 high above 1900 to a 2015 just below the 1050 level. After that low was set in 2015 prices pushed up to find range resistance in the 1350-1380 area; a zone that had held the highs over a couple of different tests, including through the 2018 open. Buyers were finally able to break-above in June of 2019 and the bullish breakout never looked back, running all the way up to a fresh six-year-high at 1557. This keeps the door open for further topside potential, especially as topics like FOMC policy and trade tensions look to remain in the headlines leading up to next year’s election, both items which can further contribute to the topside of Gold prices.

Gold Monthly Price Chart

Chart prepared by James Stanley; Gold on Tradingview

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX