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Has the price of gold bottomed out?

Has the price of gold bottomed out?

So, has the price of gold bottomed out, or is this another false hope for the bulls?

Earlier there was an interesting reaction to the US CPI report, which turned out to be stronger than expected as food prices rose by the most in 40 years. The US dollar first rose and then fell while equities did the opposite, suggesting investors are trying to figure out if the Fed’s rate hikes are being factored in. the expected consumer price index and the latest rise in bond yields.

So, has gold bottomed out or is this another false hope for the bulls?

We all know why gold has struggled lately: (1) a strong dollar, (2) rising bond yields (making this uninteresting commodity less attractive to yield seekers), and (3) holding the metal costs money.

But prices have now become quite “cheap” below $1,850. Gold looks more attractive again at these levels, especially given the recent carnage in the cryptocurrency markets and the declining purchasing power of fiat currencies amid rising inflation and current stock market volatility.

In fact, if you compare gold with some other currencies, it is not so bad. When last checked a few days ago, the price of gold in euros is up about 10% YTD and even higher in pounds (+11%) and yen (+16%). Even against the dollar, it is still hovering in the positive zone since the beginning of the year. So the fact that it has managed to endure the impressive dollar rally shows to some extent that there must be at least some demand for gold from those who want to protect their wealth from the erosion of inflation and hold on to fiat currencies.

For this reason, I remain cautiously optimistic about the precious metal’s long-term outlook. With the US dollar seemingly tired, the precious metal could start a strong rally from here, especially if the decline in the bond market stops.

Interestingly, the price of gold managed to find support in the technically favorable area around $1,835.

Daily Gold Price Chart (XAU/USD)

Source: StoneX, TradingView

Here the 200-day moving average is converging with the uptrend. If he manages to build a base here and break through several levels of resistance, he is sure to attract the attention of the bulls waiting on the sidelines. However, if the trend breaks, the wait will have to continue.

Text: Fawad Razaqzada, FOREX.com » Official site

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Disclaimer: The information and opinions contained in this report are for general information only and do not constitute an offer or solicitation to buy or sell any currency contracts or CFDs. Although the information contained herein has been obtained from sources believed to be reliable, the author does not warrant its accuracy or completeness and shall not be liable for any direct, indirect or consequential damages that may result from anyone relying on such information.

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