This is a macro view of the price of gold taking into economic factors.
To know where gold is heading in 2020, we first need to look into its past.
From 1998-2011, gold was in a bull market which we can see with the rocket ships and price movement.
From 2012-2016, the price of gold went into a 5-year bear market, stocks rallied and investors thought the world economy was the best it’s ever been.
Signs of weakness in the economy started showing in May 2019 when gold smashed through the $1350 level, confirming the start of a new bull market, but how far will it go?
There are a few obvious levels of support and resistance to help guide us, let me start with the support.
If the economy does pick-up and we see a V-shape recovery, I expect gold to move lower between the $1685-$1550 range, maybe even lower back into bear market territory (a break lower of $1550).
The likelihood of that happening is low, based on data coming out of China which shows they are far from a V-shape recovery, unemployment numbers in the West, company bankruptcies etc.
What looks more likely is a global rescission (an L shape, W shape or L_ shape recovery), negative interest rates and maybe inflation, although it's a little too early to call that yet.
This is the bullish case for gold and why the price has moved upward since the start of the year, and it is making ATH highs in most other currencies outside the USD.
The RSI is moving into the oversold area which shows momentum for gold is high, and it will need that momentum to break the next to resistance levels at $1785~ and the last all-time high of $1925.
Anyone who has spent a lot of time with gold knows that this is an asset that moves slowly, gold does not move 10% overnight, historically.
The next logical stop for gold is to clearly take out the $1,785 and hold above that level, turning resistance becomes support.
If gold can break $1,785 level, that will bring more eyes to the asset and build the monument to break the all-time high.
Gold is not going to have an easy path to break $1,785 or $1,925, it’s going to be tough and will most likely rely on some market news to make these breakthroughs possible.
If gold cannot clear the $1,785 level, it will re-test the $1685~ level and could move lower if support does not hold and see it going as low as $1550~.
The next few months of the macro-economy should give us a clear picture of where gold is heading next.
To know where gold is heading in 2020, we first need to look into its past.
From 1998-2011, gold was in a bull market which we can see with the rocket ships and price movement.
From 2012-2016, the price of gold went into a 5-year bear market, stocks rallied and investors thought the world economy was the best it’s ever been.
Signs of weakness in the economy started showing in May 2019 when gold smashed through the $1350 level, confirming the start of a new bull market, but how far will it go?
There are a few obvious levels of support and resistance to help guide us, let me start with the support.
If the economy does pick-up and we see a V-shape recovery, I expect gold to move lower between the $1685-$1550 range, maybe even lower back into bear market territory (a break lower of $1550).
The likelihood of that happening is low, based on data coming out of China which shows they are far from a V-shape recovery, unemployment numbers in the West, company bankruptcies etc.
What looks more likely is a global rescission (an L shape, W shape or L_ shape recovery), negative interest rates and maybe inflation, although it's a little too early to call that yet.
This is the bullish case for gold and why the price has moved upward since the start of the year, and it is making ATH highs in most other currencies outside the USD.
The RSI is moving into the oversold area which shows momentum for gold is high, and it will need that momentum to break the next to resistance levels at $1785~ and the last all-time high of $1925.
Anyone who has spent a lot of time with gold knows that this is an asset that moves slowly, gold does not move 10% overnight, historically.
The next logical stop for gold is to clearly take out the $1,785 and hold above that level, turning resistance becomes support.
If gold can break $1,785 level, that will bring more eyes to the asset and build the monument to break the all-time high.
Gold is not going to have an easy path to break $1,785 or $1,925, it’s going to be tough and will most likely rely on some market news to make these breakthroughs possible.
If gold cannot clear the $1,785 level, it will re-test the $1685~ level and could move lower if support does not hold and see it going as low as $1550~.
The next few months of the macro-economy should give us a clear picture of where gold is heading next.
