Category: Market News

Gold: USD 2,000 per ounce within reach

Sirhc
  • Gold powers to an all-time high
  • The stars are aligned for gold prices to continue to rise
  • A lower dollar, aggressive monetary policy easing, ultra-low interest rates, negative US real yields, fiscal stimulus and the technical outlook all support gold prices
  • Nonetheless, positioning does remain extreme which could encourage volatility

Introduction – Will gold break records?

On 9 July we released our Gold Watch – Gold gains from global stimulus measures. In this report we revised our gold price forecasts because the crucial technical resistance at USD 1,800 per ounce was taken out. Today the all-time high at USD 1,921 from 6 September 2011 was taken out. What do we expect going forward?

Stars aligned for gold price rises

The stars are aligned for gold prices and a test of the psychological level of USD 2,000 is within reach now. There are several reasons for this.

Firstly, since the start of July the US dollar has declined. For a start a more constructive sentiment on financial markets has resulted in lower safe haven demand for the dollar. In addition, investors shy away from the dollar because of the tensions between the US and China and the Presidential elections. Moreover, the handling of the COVID-19 situation in the US has weighed on the US dollar. Finally, the monetary policy easing by the Fed is a crucial driver of dollar weakness.

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PRECIOUS-Gold sets sights on $1,900/oz mark as haven flows gather steam

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* Gold up more than 4% so far this week

* Silver slips, but headed for best week in over three decades

* Dollar index near two-year low, equities retreat (Recasts, adds comments, updates prices)

By Eileen Soreng

July 24 (Reuters) – Gold resumed its march toward $1,900 on Friday as an escalation in the U.S.-China spat added further safe-haven fuel to a rally to a nine-year peak driven by fears over the economic hit from the coronavirus pandemic.

Silver, meanwhile, was en route to its best week since 1987.

Spot gold was up 0.3% at $1,892.32 per ounce by 1002 GMT, having hit its highest since September 2011 at $1,897.91 on Thursday.

U.S. gold futures rose 0.1% to $1,890.90.

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Gold shatters ‘summer doldrums’ as it climbs to record territory

Sirhc

Most-active gold contract nears all-time high, as front-month contract scores a record

The gold market saw a lot of excitement on Thursday, with its climb over the last five sessions in a row ultimately lifting prices into record territory.

“Ordinarily this is the quiet time for gold—summer doldrums,” said Ross Norman, chief executive officer of precious metals news and information provider Metals Daily. “Well, not this year.”

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Gold’s ‘Freight Train’ Rally Continues With Sights Set on Record

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(Bloomberg) — Investors continue to pile into gold as prices advanced for a fifth day, moving ever closer to the all-time high reached in 2011. A weaker dollar, negative real rates, worries over the economic cost of the pandemic and flaring political tensions have both gold and silver heading for their biggest annual gain in a decade. Silver, which rallied 20% over the previous four days before

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US Dollar, Gold, Silver Price Analysis: Cross Asset Correlation

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LIQUIDITY IN ABUNDANCE WITH CROSS-ASSET CORRELATIONS ELEVATED

As liquidity stemming from monetary and fiscal policy remains rife, cross-asset correlations are elevated, most notably this has been evidenced by the continued strong relationship between equity and FX markets. As market volatility drifts lower, high beta currencies have taken its cue from the pick-up in equities, which has largely come to the detriment of the US Dollar. As we highlighted yesterday, the negative relationship between the US Dollar and stocks is its strongest in several years. Put simply, the longer equity markets edge higher, the longer the downtrend in the greenback.

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Silver Price Daily Forecast – Silver Failed To Gain Momentum Above $23.00

Sirhc

Silver faced resistance at $23.25 and pulled back closer to $22.50.

Silver Pulls Back After The Major Upside Move

Silver made another attempt to gain momentum above $23.00 but faced resistance at $23.25 and pulled back as the U.S. dollar started to rebound against a broad basket of currencies while gold gained some ground in continuation of current upside momentum.

The U.S. Dollar Index has found support near March lows and is trying to settle above the 95 level. The U.S. Dollar Index has declined from 97.5 to 95 without any material rebound attempt. This move has provided significant support to silver as weaker dollar makes it cheaper for buyers who have other currencies.

In case the U.S. Dollar Index manages to stay above 95 and starts to rebound, silver may experience some pressure.

Gold continues its rally and has recently traded as high as $1888 on a spot basis before pulling back closer to $1870. Just like in silver’s case, gold’s RSI is in the overbought territory, and the risk of correction is elevated.

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Gold has room to overshoot to the topside

Sirhc

Commerzbank technical analysis on gold is looking for it towards $2000:

  • is on course for the 1921.50 September 2011 high
  • there is room for an overshoot to the top of a 49-year channel at 1983.00 … our long-term target …  should hold the initial test and provoke some profit taking
  • Forays above 2000 are expected to remain short-lived”  

Support is offered by the 55-day ma at 1797 

  • and the four-month uptrend at 1795
  • Below 1795 lies the 1765 May high. This guards the 1670 June low.

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Inflation/Deflation: The Economy Is An Elephant

Sirhc

This is the key dynamic of the economy going forward: defaults on debt, declining wealth as assets are relentlessly repriced lower and sharp declines in income due to layoffs and debt defaults.

The economy is like an elephant surrounded by blindfolded economists and pundits: what each blindfolded person reports about the elephant depends on what part they happen to touch.

This is why aggregate measures such as gross domestic product (GDP) and the consumer price index (CPI) will be misleading and therefore useless going forward: different parts of the economy might experience sharp deflation while other parts are experiencing rapid inflation. What each household and enterprise will experience depends on their exposure to these cross-currents.

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