The trade dispute between US and China has shown tidal crests and troughs in the international market. Despite the rumors about the possibility of US economy going into recession, the US dollar index has been robust at over 95.
A drop in US dollar index value shall lead the price of gold to hover upside. The fund managers have already been anticipating the gold price climbing up to USD 1,500 per ounce by the end of 2019. The spectacular fall of cryptocurrencies from their heights over the past six months has reminded investors that gold still remains the safe haven for their investments.
Due to the weakness in the Nepali Rupees, the price of bullion in the Nepali market is at near record high. If the international price of gold increases, the price of yellow metal in the domestic market will make new records this year. The demand of gold in India and China has not slowed despite the higher price.
As central banks and governments of many economies have already bought gold for their inventory as a tool to hedge the possible economic risks, now the portfolio managers are eying this as an opportunity to invest in gold for the medium term.
Saudi Arabia, the largest producers among the OPEC countries, has lowered its production for past few months in order to elevate the price of crude oil. The International Monetary Fund (IMF) has already warned Saudi Arabia that the price of crude oil should be at minimum of USD 71 per barrel for the country to maintain its balance of payments properly. The recent tours of Saudi prince Mohammed Bin Salman al Saud to Pakistan, India and China indicate the ambition of Arab nation to grow business in the region.
On the other hand, the United States has increased its crude oil output to contain its inflation rate as lower production leads to the higher price of oil which is one of the catalysts for the inflation rate hike. In this situation, it is likely that the crude oil price will climb to USD 75 per barrel by the end of the year. However, there are also chances that the price will decline if the US-China tug of war drags on for a long time leading to the lower demand for crude oil internationally. Similarly, the political crisis marred Venezuela will also be another factor for increase or decrease of crude oil price.
US Dollar Index
Since the past one year, the US Dollar index has been maintaining its higher positions. It is primarily because US has been successful in maintaining its robust economic growth amid US-China trades war. The growth of the Wall Street stock indices has been a mirror of the country’s economic robustness. Nevertheless, there are also concerns that for how long US can sustain this. Prominent economists and market analysts around the world seem to be worrying about the possible stock market crash. Any kind of crash in the stock market will resonate throughout the world with far reaching consequences. The support of US Dollar Index value at 92 will be crucial in this scenario.
This year, India will have the parliamentary elections to decide who shall run the government for the next five years. The Indian currency seems to be sustaining the current level. If the current Prime Minister Narendra Modi wins for the next tenure, Indian economy is expected to grow in a faster pace than currently. Ultimately, this would result into a stronger value of the India currency. But to maintain the exports, the government is likely to be interfering in the Indian currency value at next phase.