The price of gold has risen 30% since March, is this still a buy?

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Gold price rose from $1,451 to $2,070 in less than six months
The mood in the population with regard to this precious metal has become greedy and euphoric
If the price jumps above $2,000 again, it would be a “buy” signal and we have the open road to $2,050.

Gold has continued its correction from the record highs of over $2,070 recorded in the first week of August. Nevertheless, there is no reason to panic, and as long as the gold price remains above $1,800, this precious metal is in the buy zone.

Fundamental analysis: The price is supported by uncertainty about the global economic future.

Gold is considered a safe haven and the price of gold has risen in the wake of the coronavirus crisis as investors look for safer places to invest their money. Public sentiment towards this precious metal has become greedy and euphoric, and according to some analysts, gold is currently overbought.

The price of gold has decoupled itself from the fundamentals, and the flow of money in gold “shows how much speculation and enthusiasm there is about this precious metal. Nevertheless, the scenario for the gold price could be even better, as the “pigeon-eyed” decision of the US Federal Reserve continued to put pressure on the US dollar.

The former CEO of Goldman Sachs, Lloyd Blankfein, also said that the US dollar would continue to depreciate and the gold price would rise even more. This precious metal is also supported by uncertainty about the future of the global economy, and safe-haven assets typically perform well during downturns and financial crises.

The gold price may be ready to rise higher as the Federal Reserve has announced that it will keep interest rates low for a longer period of time to support economic recovery.

Technical analysis: Gold price is in the “buy” zone

The gold price has continued its upward trend and it is expected that investors trading gold will be more active in the coming weeks.

Data source: tradingview.com

If we take a look at the chart above (period of one year), we can see that the price of this precious metal rose from $1,445 to $2,075 and then began to fall. As long as the price remains above this trend line, this precious metal is in the “buy” zone and there is no sign of a trend reversal.

If the price falls to the trend line and we get a “bullish” confirmation candle, this would be a very good entry point for short-term traders who trade with “stop loss” and “take profit” orders. The trend line represents a very strong support level, if the price breaks through this trend line, it would be a very strong “sell” signal and we have an open path to $1,900 (this is also a support level).

If the price jumps above $2,000 (short term resistance level), this would be a confirmation of the “bullish” trend and an open path to $2,050 or even $2,100.

Summary

The gold price is currently overbought, but the weakness of the dollar and low US Treasury yields could help this precious metal make even greater strides. The gold price has extended its correction from the record highs of $2,070 recorded in the first week of August. Nevertheless, there is no reason to panic, and as long as the gold price remains above $1,800, this precious metal is in the “buy” zone.

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