[ad_1]
Any real correction that many traders foresaw could have occurred, with market participants buying any reasonable drop in prices. The one-day drop of $ 117 last week appears to be the final cap of a shallow correction that resulted in gold pulling around 23% before finding support.
After hitting the new all-time high of $ 2,089 on Friday August 7, market participants lowered prices, with the most active December 2020 futures contract closing at $ 2,028. Although gold traded at a lower high on Monday, it had a slightly higher low, which caused Tuesday’s dramatic drop.
On Tuesday August 11, gold futures opened at $ 2,037, then traded at an intraday low of $ 1,912 before recovering and closing at $ 1,946, pushing down nearly $ 100. The next day, gold would trade at an intraday low of $ 1,875. It appears that this price point drew an influx of market participants offering the precious yellow metal on the upside, which resulted in gold closing at $ 1948, which was just above the price of Tuesday closing.
As we discussed last week, the dramatic sell-off that occurred on Tuesday presented a unique opportunity for traders to once again suggest a rise in gold prices. This allowed traders who had taken profits to reposition themselves on the long side. More importantly, it gave some market players a second chance to rebalance their portfolios with a heavier weight in gold after missing recent momentum towards a new all-time high.
To put it bluntly, the fundamentals that drove gold and silver prices up dramatically are still at play. The speed at which we have seen prices come back up confirms the hypothesis of many analysts, including myself. even, that what we witnessed last week was simply a profit taking with no major change in the fundamental logic that is at the heart of this rally.
The global pandemic is still ravaging countries. According to the John Hopkins University & Medicine Coronavirus Resource Center worldwide, 21,761,813 people have contracted the virus. Although the death rate appears to be stabilizing globally, deaths now stand at just over three-quarters of a million (776,751) lost souls.
The pandemic has forced the Federal Reserve as well as other core central banks to maintain an extremely accommodating monetary policy with interest rates close to zero and simultaneously use quantitative easing as the main tool to support economies around the world. .
The Federal Reserve’s actions go hand in hand with aid funded by the United States Department of the Treasury, which now exceeds $ 3 trillion. This does not include any additional help currently needed. While Congress is unable to break the deadlock and effectively agree on the next aid package, it is recognized that without further aid, the millions of unemployed in the United States will have to endure further financial hardship.
These factors are behind the recent sharp decline in the US dollar and a major factor driving up the price of gold. Currently, we have minor resistance at $ 2000 an ounce, with resistance at $ 2040 and major resistance at $ 2080. Our technical studies indicate that gold will once again challenge and surpass $ 2,000 an ounce and could easily trade to a new all-time high within the next two months.
For those who want more information about our services, just use this link.
Always wishing you good trading and good health,
Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept guilt for any loss and / or damage resulting from the use of this publication.
[ad_2]
Source link