Gold Hits Highest Level Since 2012 – $1800+ Next?
Matt Weller, CFA, CMT June 24, 2020 2:59 PM
Even the most diehard goldbug would be hard-pressed to envision a better backdrop for gold prices
- (Re)surging COVID-19 cases in the US, Latin America, and Germany, among others
- Conflicting statements on the status of the US-China trade deal
- Unprecedented fiscal and monetary stimulus measures across the globe
- The VIX (the stock market’s “fear index”) averaging 40 since the start of March
- 10-year US Treasury bonds yielding just 0.7%
When you lay out all the reasons for (and evidence of) risk in the global financial markets, it’s not hard to understand why gold prices are trading at their highest level in over 7 years, as my colleague George Lam noted during today’s Asian session. Put simply, even the most diehard goldbug would be hard-pressed to envision a better backdrop for gold prices, and the bulls are now starting to consider whether the yellow metal could make a run at its all-time record high above $1900 sooner rather than later.
From a technical perspective, gold finally broke above two-month resistance at $1750 earlier this week, confirming a small continuation inverted head-and-shoulders pattern in the process. For the uninitiated, this pattern shows growing buying pressure and once confirmed by the break above the “neckline”, projects a “measured move” target of the same magnitude as the pattern, in this case above $1800.
Source: TradingView, Gain Capital
As we’ve learned over the past couple months, market sentiment can turn on a dime, but as long as gold can hold above previous-resistance-turned-support at $1750, the short-term bias points to the potential for further gains. To the topside, bulls may look to target previous resistance near $1800 or the measured move objective near $1815 next.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.