One for the gold bugs, ABN Amro looking for prices higher
Reasoning:
1. the fall for gold prices halted close to the 200-day moving average
- a positive development from a technical point of view
- strengthens our case that gold prices will rally towards the end of this year
Second
- developments on trade have decreased the likelihood of tighter central bank policy around the globe
- easier monetary policy is far more likely
- our base case scenario … expect the Fed to start cutting the Fed funds rate by 75bp by Q1 2020 (this is currently priced into financial markets)
- ECB to restart QE
- other central banks to become less hawkish - postponing the start of the tightening cycle, or even cutting rates
3. US dollar is struggling to rally in the current risk-off environment
- financial markets fear the policy uncertainty that comes with President Trump's increasingly erratic trade policy
- US dollar is likely also being punished because the US's longer term credibility is weakening
- may not be visible in EUR/USD, because the euro has its own challenges, but it is visible versus the Japanese yen, the Swiss franc and gold prices
Fourth
- we expect the Chinese authorities to step up stimulus to support the economy. It is likely that
