2020-07-09 • Updated
Yellow metal has become the best performing asset during the coronavirus. Some analysts foresee it will reach $2 000.
Gold has risen nearly 19% this year amid the market uncertainty caused by the coronavirus outbreak. Actually, it was quite easy to predict as investors searched for a safe place to park their money and, eventually, they have picked gold for this role. They didn’t have so much choice: the US, the JPY and gold itself. Not long ago, the US dollar was the strong rival to the precious metal. However, now the global dominance of the greenback has started waning.
Moreover, according to HSBC, gold prices had been already high before the virus outbreak, so the coronavirus was just the additional tailwind. In addition, central banks increased the money flow and lowered interest rates to support economy. That gave an additional stimulus to the bullion, as well, because it will be unprofitable to invest in other assets: lower rates – lower returns.
Finally, the current resurgence in US virus cases forced investors to hedge their capital. It is one of the reasons why stocks and gold are rising together, while it should be quite the opposite. People invest in both ways to save yourself from huge losses. If stocks drop, profits from gold trading will offset their losses.
The gold price has to exceed $1 916 to beat the all-time record. Mr Steel from HSBC believes that uncertainties for the global economic recovery will drive gold prices higher till the end of 2021. His prognosis: “prices could reach $1 845 by the end of this year before falling back to $1 705 in 2021”. Analysts from Goldman Sachs predict that the yellow metal will surge even higher. The bank set a 12-month target price at $2 000. In April, the Bank of America put a $3 000 price for 18 months.
Gold dropped today after the 6-day rally. Analysts anticipate that it’s just a correction and the gold will continue its way up further. If the price breaks through the support at $1 807, it may fall deeper to the key psychological mark at $1 800. When it manages to reverse and goes up, it may meet the resistance at $1 818. The way up this level will push prices higher.
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Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...
Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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