Will The Yellow Metal Show Strength Again?
The gold price has been tumbling since the beginning of 2021. It reached its lowest point on January 15th at $11,400 per ounce and is currently hovering around $12,300.
Gold’s prices are dependent on a variety of factors including global economic trends, supply-demand dynamics in the physical market and geopolitical events that might cause volatility in the movement of the yellow metal’s price.
- Gold has been tumbling since the beginning of 2021.
- Weaker Greenback led to a slightly higher price of gold.
- Geopolitical events might cause volatility in the movement of the yellow metal’s price.
The yellow metal has been moving downwards since the beginning of this year. It has depreciated by 7.9%. The selloff was faced by strong daily support as seen in the image, where the price posted a double bottom. This usually indicates a potential reversal from a downward movement to an upward one. Currently, gold is trading within a channel formation where most probably, it will make small retracement towards the neckline of the double bottom and then rally upwards to the 1900 level.
Fundamentally, when there is an economic crisis as what is happening now, gold shows some strength and will be bought by investors as a haven metal.
Two days ago, President Joe Biden’s pick as a treasury secretary, Janet Yellen stated that the Federal Reserve will likely execute a 1.9 trillion US Dollar stimulus for the economy.
“I think relief that we provide to those who are in the greatest need and to small businesses have the best chance of providing both relief to those who’ve been so badly affected by the pandemic and creating a great deal of spending per dollar spent”
– Business Insider
This statement led to a weaker dollar and pushed the price of gold to the upside. Another factor that will be affecting the price of the gold is, the pandemic.
With many countries in the grip of a second wave, the world economy remains under pressure. Further lockdowns and restrictive measures will result in an unstable dollar. This might lead to an appreciation of the gold prices.
A weakened dollar could be contributing to an increase in gold prices. With the world caught up in the grip of the second wave and struggling with restricting measures, this could lend support to a strong rally for gold prices.
With all these geopolitical events occurring around the world could the gold rally again?