ECONOMIC RECOVERY, RATES AND THE DOLLAR PENALIZE AN OUNCE OF GOLD
The yellow metal is losing ground this week due in particular to expectations of economic recovery. In addition, the ounce of gold is suffering from the return of risk appetite and the rise in interest rates and the dollar.
The rise in sovereign rates linked to expectations of renewed inflation in the wake of the expected recovery in 2021 makes all precious metals less attractive. As a result, operators are taking advantage of the current economic climate to invest in riskier assets.
Investors again seem to want to believe in the scenario of a recovery in the second half of 2021, under the effect of the Fed’s stimulus plans and monetary support. The global economy should pick up from the second quarter onwards, thanks to an increase in vaccination campaigns.
For the United States, this will depend on the amount of Joe Biden’s support plan. The American president hopes to increase it to 1.900 billion dollars, against the opinion of the Republicans. The American Central Bank expects a growth of 4.2% this year after a contraction of 3.5% last year. Europe, on the other hand, is expected to experience a more modest recovery after contractions in the fourth quarter of 2020.
Consequently, despite the upward momentum since 2019, some analysts are now cautious about the outlook for gold in 2021. Nevertheless, as usual, let’s take a look at the technical part to see what the next targets are.
XAU/USD: PRICES WORKING A MAJOR PIVOT TOWARDS $1,800
On this weekly chart, we have a strong bullish momentum, but since August 2020 prices have been locked in a bearish channel (Bull Flag). Sellers have once again tried to push the $1,800 but buyers are defending this level of support coupled with the moving average 50.
An incursion below this threshold would not bode well, it would open the way to a deeper correction towards $1,750 and then in case of strong pressure a return to the lower bound around $1,700. Therefore, gold must absolutely not bend in the coming days and quickly initiate a rebound in order to regain height to avoid the worst.
The bullish technical signal will be given with the output from the top of the channel. Crossing $1,883 would lead to a restart of the uptrend with targets towards $1,960 and the old historical highs. As a reminder, if this trend continuation pattern (Bull flag) is confirmed in the coming weeks, the theoretical target is around $2,300.
Source DailyFX
Disclaimer: All articles published here are for information purposes only. They can in no way influence your investment decision. Only you can decide on the best possible investment for your money, and whatever decision you make will involve risk. The information or data included here may already be out of date and should be verified from another source, in case you decide to act.
For more information on trading precious metals, contact one of our branches located at:
Switzerland : Berne | Delémont | Fribourg | Genève | La Chaux-de-Fonds | Lausanne | Morges | Neuchâtel | Sion | Zürich
France : Angers | Angoulême – Champniers | Annecy | Besançon | Brest | Clermont-Ferrand | Lanester | Mandelieu | Marseille | Nîmes | Niort – Chauray | Poitiers | Quimper | Rennes – Saint Grégoire | Toulouse – Fenouillet
