Watch Another Analyst view on Gold and silver from our Team
The biggest risks to financial stability in 2020 revolve around geopolitics and trade. Part of the reason why people are getting bullish is the idea that a lot of the grey clouds [from 2019] are starting to get answers and the year 2020 could be when we get the answers, But political events make trading difficult, especially when it comes to the pricing of risks, we expects to see a “highly volatile performance in the markets in 2020.”
Through lowering rates and through massive re-establishment of balance sheet expansion, a lot of central banks are taking performance from the future. And to get anywhere near close those financial gains going forward will be very difficult. A lot of the global growth uncertainty going forward centers around trade agreements and tariffs. “That is the top risk we see in 2020.”
U.S.-China trade war.
One of the biggest risks of 2020 remains U.S.-China trade negotiations.
“The key downside risks are really around trade negotiations.As the new year begins, the U.S.-China trade war concerns seem to be hiding under the radar.“The U.S.-China trade talks have clearly left center-stage in the face of the developments in the Middle East, but a team from China is expected to arrive in the United States for a signing ceremony on January 15.If trade negotiations with China were to fall apart, risk of a recession would exacerbate, That would continue to build uncertainty into economic outlook and will have an extended effect of fixed investment, which has already been struggling but China needs the U.S. and the U.S. needs China, so I suspect that trade pact will be signed.”Some analysts see phase one deal as a temporary measure that stopped additional tariffs from coming into effect."What seemed to have been agreed upon was just enough to delay the Dec. 15 tariffs. Nothing of the sort that was lauded to be a phase one trade deal.
Going forward, the phase two trade deal negotiations could also be used as “a carrot” when the stock market sells off, “And any time there are worries, they will dangle this carrot of a phase two trade deal now because the idea of a phase one trade deal worked so well.
U.S.-Iran tensions.
The new risk in 2020 is the rising tensions between the U.S. and Iran following last week’s news that the U.S. killed Qassem Soleimani, the top commander of the elite Quds Force of the Revolutionary Guards, in a military airstrike.Geopolitical risk is probably concentrated more in the Middle East than it is anywhere else apart from the obvious exception of Hong Kong and China,.In the latest geopolitical move, the U.S. President Donald Trump tweeted that the U.S. has 52 Iranian sites set for attack if Iran retaliates against the U.S. for the killing of its general.2020 was supposed to be the year where the global economy bounces back to life after the US and China trade tensions thawed and investors got more clarity around Brexit. Events over the last week have undoubtedly put this outlook at risk.
“Investors will remain on the defensive… as everyone now awaits a possible retaliatory response by Iran. This may not be an immediate one, but rather a protracted event which investors need to carefully calculate when determining their portfolio’s risk..
U.S. presidential election.
Another key risk facing the markets in 2020 is the U.S. presidential election that will take place on November 3. The U.S. presidential election needs to be closely monitored as it directly impacts the financial markets.
“With several possible outcomes, we see room for market volatility. This should set the stage for safe-haven assets to perform through 2020. The U.S. presidential election could potentially inflate recession fears."We still see scope for the U.S. election to perhaps be a key turning point for the global economy next year as well. So far, market reaction to the U.S. President Donald Trump impeachment news has been muted with analysts saying it bears little significance for investors because the Republican-controlled U.S. Senate is likely to vote against removing Trump from office.
We have already shared our view towards the Gold and silver market in our previous trading idea however if we would have to give you one specific recommendation towards the precious metal sector we would say focus on the silver instead of the gold at the moment.
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