TOPICS IN THIS GOLD ANALYSIS
- Geopolitical tensions strengthen the yellow metal
- Gold: a triangle exit
Geopolitical tensions strengthen the yellow metal
The barbaric relic has regained height due to tensions on the geopolitical front between Russia and Ukraine. Fears of a possible Russian invasion of Ukraine have prompted demand for active safe havens.
However, gold’s upside is still limited by continued high inflation, expectations of aggressive rate hikes and other monetary reduction measures required by the Federal Reserve.
The latest data showed that the consumer price index for January jumped 7.5% year-on-year. Treasury yields rose sharply as investors bet on a more aggressive Federal Reserve and Reserve Bank of St. Louis Chairman James Bullard calling for a 100 basis point rate hike by July 1 .
Meanwhile, the dollar continues to gain ground against other major currencies, limiting gold’s gains due to the inverse correlation between the two assets.
Rising bond yields are generally a drag on gold, but the yellow metal also represents a hedge in case central banks are unable to contain inflation.
Gold: a triangle exit
The price of gold continues on its implementation at the beginning of the week, the crossing of 1,850 dollars opens the way to a new leg of increase. As a reminder, the market was consolidating inside a symmetrical triangle, so the break of the upper limit pleads for a bullish acceleration in the coming weeks.
As long as prices don’t fall back below $1,830, buyers hold their hand. For now, the chart analysis suggests a continuation of the bullish flow towards $1,910. The breakout of this threshold should then propel Gold towards 1,960 dollars and then 2,000 dollars.
To sum up, once gold seems to be starting a long-term bullish momentum again after several months of consolidation. Given the current context, everything suggests that the market has the capacity to set a new historic record in 2022.
DAILY GOLD CHART
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