Gold Outlook - Is it really a safe haven?
Let's start with a bit of background information on Gold.
There is something wrong with the predominant view about Gold, treating it as a safe haven. It is one of the most speculative commodities in the market, if not the leading one. After the global economic crises in 2008, immense volumes of liquidity and the declining treasury yields (ps. gold has an inverse correlation with treasury yields) gold prices spiked up to its ATH at USD 1.900. However, we have experienced a 45% retracement back to USD 1.000 levels after that. A SAFE HAVEN WOULD NOT LOSE 45% OF ITS VALUE, PERIOD!!
Considering the past 6 months, gold has been priced purely on speculation and fed by the rising tensions with Iran and trade war drama with China. To crown it all, Corona Crisis was added to the play as well. Furthermore, Silver and Gold has always been closely correlated and yet Silver did not keep pace with the latest rally of Gold. The increasing gap between Gold and Silver correlation could also be considered worrisome for Gold prices.
On the other hand, we have recently experienced in the latest crash of stock markets that the investors closed their gold positions to cover their margin calls. In addition, Passive Funds are known to sell all assets including gold positions when they're in BEARMODE. So the next expected leg down on the stock market is possibly going to crash gold prices too.
After this boring entry, let's dive in to our technical analysis and see what to expect for the days ahead:
In the first trading day of this week, we'll probably see a reversal from the current prices or the range above at 1.715 - 1.720. It will be a good short trade setup with a nice R/R, targeting the first demand zone at 1.640 - 1.650, which offers 650-700 pips profit. However, be cautious about President Trump trying to blaze the trade war drama again. That might trigger a move up to 1.775-1.800 range.
On the downside, the following ranges for possible rebounds are; 1.605-1.615 zone, 1.570-1.580 zone for the coming days.
Our experts predict that gold prices could dump to the key levels at 1.350 - 1.400 in the mid term.
Join us at our free telegram channel BullsITrading and let's trade together.
There is something wrong with the predominant view about Gold, treating it as a safe haven. It is one of the most speculative commodities in the market, if not the leading one. After the global economic crises in 2008, immense volumes of liquidity and the declining treasury yields (ps. gold has an inverse correlation with treasury yields) gold prices spiked up to its ATH at USD 1.900. However, we have experienced a 45% retracement back to USD 1.000 levels after that. A SAFE HAVEN WOULD NOT LOSE 45% OF ITS VALUE, PERIOD!!
Considering the past 6 months, gold has been priced purely on speculation and fed by the rising tensions with Iran and trade war drama with China. To crown it all, Corona Crisis was added to the play as well. Furthermore, Silver and Gold has always been closely correlated and yet Silver did not keep pace with the latest rally of Gold. The increasing gap between Gold and Silver correlation could also be considered worrisome for Gold prices.
On the other hand, we have recently experienced in the latest crash of stock markets that the investors closed their gold positions to cover their margin calls. In addition, Passive Funds are known to sell all assets including gold positions when they're in BEARMODE. So the next expected leg down on the stock market is possibly going to crash gold prices too.
After this boring entry, let's dive in to our technical analysis and see what to expect for the days ahead:
In the first trading day of this week, we'll probably see a reversal from the current prices or the range above at 1.715 - 1.720. It will be a good short trade setup with a nice R/R, targeting the first demand zone at 1.640 - 1.650, which offers 650-700 pips profit. However, be cautious about President Trump trying to blaze the trade war drama again. That might trigger a move up to 1.775-1.800 range.
On the downside, the following ranges for possible rebounds are; 1.605-1.615 zone, 1.570-1.580 zone for the coming days.
Our experts predict that gold prices could dump to the key levels at 1.350 - 1.400 in the mid term.
Join us at our free telegram channel BullsITrading and let's trade together.
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