Gold Price Outlook:
- Gold has climbed nearly 30% in the year to date as central banks fill the global economy with stimulus
- With little end in sight, gold may continue to benefit from looser monetary policy and low interest rates
- That said, gains may require periods of consolidation before resuming higher
Gold Price Forecast Remains Encouraging on Ever-Expanding Stimulus
Gold rounded out the month of August on a quiet note, maintaining a relatively tight trading range compared to some of its volatility in months past after a troublesome start in early August. Nevertheless, the precious metal was able to recoup some of its earlier losses and enjoys a technical position that may be constructive for further gains. Further still, the fundamental tailwinds that have helped gold climb remain in play.
Data Source: Bloomberg. Compiled by John Kicklighter
To that end, stimulus from the world’s leading central banks continues to grow as they look to revive their respective economies in the wake of covid-19. With a period of low interest rates and expanding balance sheets ahead, fiat currencies may continue to shed value relative to other stores of value like gold and silver.
Recommended by Peter Hanks
Get Your Free Gold Forecast
Thus, the longer-term outlook for gold remains encouraging in my opinion and periods of weakness may allow for attractive trading opportunities as they might act as mere consolidation before a continuation higher. With that in mind, traders should track nearby support as the levels could offer enticing risk-reward opportunities.
Gold (XAU/USD) Price Chart: 4 – Hour Time Frame (November 2019 – September 2020)
As it stands, nearby support may reside along the ascending trendline from May – around $1,932 – while a subsequent Fibonacci level at $1,920 could offer secondary support. Together, the areas of potential support might help keep gold prices afloat in the event of a bearish reversal. In addition to the previously outlined levels, technical influence may also be derived from the August swing low around $1,863.
Recommended by Peter Hanks
Traits of Successful Traders
A bearish breach of the $1,863 level might warrant a reconsideration of the broader technical backdrop, as it would establish a lower-low and could mark the beginning of a larger bearish trend. Without such a development, both the technical and the fundamental backdrops look encouraging for further gold strength in the weeks to come. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
|
Leave a Reply
You must be logged in to post a comment.