Gold buy

Gold will test the level of 1970 before correction

14 July 2023 195
Gold will test the level of 1970 before correction

Gold prices are ready to hold the biggest weekly gain since April at Friday's trading session. The cumulative increase in price has almost reached 2%, and gold buyers are already focused on the next target — $1970 per ounce. Given the positive news background for the yellow metal, the $1970 level could be hit today or early next week.

 

High demand for gold is supported by the U.S. inflation statistics. After the recent serious slowdown in consumer price growth, yesterday's June manufacturing inflation data showed a similar trend. Both PPI and core PPI showed a minimal monthly increase of 0.1%, with expectations of 0.2%. More and more data point to the imminent entry of the U.S. economy into the disinflation phase.

 

Against the backdrop of such statistics, the dollar index fell below 100 for the first time since April last year. The fall of the U.S. currency may indicate that the dollar devaluation is beginning and it is becoming less attractive as a safe haven asset during the period of high volatility in the markets. All these circumstances lead to an increased interest in gold and other precious metals among traders.

 

Florian Grummes, Managing Director of Midas Touch Consulting, has a positive view on the future prospects of gold. In his opinion, gold is ready to grow up to the level of $2500 per ounce. At the moment, the yellow metal needs to break the resistance in the range between the previous historical highs of 2070–2080. After that the growth scenario will be realized within 6–8 months.

 

After the rapid growth of the previous days, today gold may have a short pause. As long as the price is above the support of 1940, further upward movement remains the priority. The Stochastic indicator lines are already close to the overbought zone, but no signal for a downward reversal has been formed yet. Therefore, chances for gold's breakout to the level of 1970 remain high.

 


Consider the following trading strategy:

 

Buy gold in the 1950–1955 range. Take profit — 1970. Stop loss — 1940.

 

Traders may also use a Trailing stop instead of a fixed Stop loss at their discretion.

This content is for informational purposes only and is not intended to be investing advice.

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