Gold Is Shining, Breaking All the Highs

• Gold has been rallying like a rocket towards 1800 level since the beginning of March
• Investors are expressing their fear by buying gold
• An inverse correlation between the DXY (Dollar Index) and Gold price

Technical Analysis:

Monthly Time Frame:

Gold has been marking higher highs since the beginning of March with no sign of stopping. On Tuesday, the metal reached a highest high by breaking the level of 1557 USD. Gold has not reached this high since 2012. 

Looking at the chart below, the yellow metal broke the downtrend (white trend-line) in August 2017 and started its move upward.

In the summer of 2019, it managed to break another level, the 100 moving average acting as resistance at that time.

From June 2019 till present, the precious metal has been rallying upward along with negative major news relating to COVID-19. 

The next short-term target for the gold could be the level of 1780 USD as a price. 

4-Hr Time Frame:

By breaking the level of 1673 USD, there will be more room for the precious metal to appreciate in the next few days. 

This commodity price is still above the 20-moving average which indicates that there will be no reversal anytime soon.

Additionally, gold succeeded to break the previous high, highlighted in the yellow circle (1703), which also shows that the price will continue its upward movement.

Another factor confirming that the gold will appreciate is the inverse correlation with the DXY index.

As shown in the chart down below, when Gold marks a peak the index shows a bottom. So, with the depreciation of US dollars, gold should display higher highs.

Fundamentals Analysis:

The yellow metal is affected hugely by the US economy since it is priced in US dollars within the financial market.

Lowering interest rates and executing a quantitative easing strategy by the fed reserve, led gold to appreciate recently.

The US government is planning to release 2.3 trillion dollars as loans through the PPP (Paycheck Protection Program). Moreover, the fed mentioned that it will buy back the governmental bonds from the commercial banks.

Along with the spread of COVID-19 through the 50 states of America, the gold price is expected to reach the 1780 level the next few days, and in case the situation stays the same, a 1800 level will likely be achieved before the end of this year.