Gold prices have hit an all-time high and are rallying further.
The following fundamental factors support this scenario:
- Upcoming elections in more than 60 countries around the world
The price of gold is highly dependent on the geopolitical environment. Global instability and uncertainty drive the precious metal's value growth.
- Central banks providing support for demand
According to the World Gold Council (WGC), financial regulators of many countries kept building up their gold reserves in January.
- Market expectations of monetary policy easing in the US at the beginning of summer, with 65% probability
This forecast is based on data from the London Stock Exchange Group, the financial company owning the London Stock Exchange. Gold would become more affordable in the US currency.
- The rising number of US company defaults in February
A JPMorgan report showed a significant rise in defaults on debt securities among companies in the United States in February. According to Moody's and other rating agencies, this trend is expected to worsen in the current quarter. Such forecasts undermine confidence in the US economy and raise concerns among traders and investors, forcing them to turn to safe-haven assets.
- The CFTC's Friday report has already confirmed speculators' growing interest in gold.
The following events will increase the volatility of gold prices in the next two weeks:
1. US Fed Chairman Jerome Powell's speech;
2. US Inflation data;
3. US Fed interest rate decision.
The expected Fed stance, a slight decrease in inflation or its preservation at the same level, and the refusal of the US regulator to raise the key rate stimulate the gradual growth of gold prices.
Any unforeseen events in the Middle East and sudden easing of the US monetary policy will significantly accelerate the growth of the precious metal price.
Unexpected tightening of the Fed's monetary policy will put downward pressure on the price of gold.
Technical Analysis Overview
The gold price has hit a new historical high. Therefore, a slight downward correction is quite likely to occur due to profit taking by traders.
However, the price growth is expected to resume, which will open the way to new highs near $2,190 (Reverse Fibonacci 14.6%).
The Bears/Bulls Power indicator confirms it, showing a clear dominance of the bulls on the metal market.
Trading plan
1. Buy GOLD at the current price, with targets at $2,170 and $2,190. A Stop Loss is placed at the level of $2,115.
2. Place a pending BuyLimit order to enter the market in a correction at the price of $2,130 with the targets of $2,145, $2,170, and $2,190. A Stop Loss is also placed at the level of $2,115.
Successful trading to everyone!
This content is for informational purposes only and is not intended to be investing advice.
