Gold Beats Fiat Currencies Over Past Months
Gold has been performing quite well over the past months at the same time that equity markets have been increasing. How is this possible? Gold is a risk off asset and shouldn't increase if risk on equities increase. The answer lay in the fact that gold is merely appreciated against all currencies as can be seen by the trade weighted dollar, yen, euro, and pound which over the past few months have all underperformed to XAUUSD. Sure, part of this is dollar strength, but undeniably it also lay in the fact that gold is still a good alternative to fiat currencies. At least, thats been the case over the past few months.
If gold decides to take a leg lower, we have a strong support level below at a range between 1277 and 1238. The two technical indicators, bull/bear sentiment index and the CCI are suggesting we are approaching relatively expensive levels at the moment and that gold long could be a bit of an overcrowded trade.
However, I can also imagine it takes a leg higher since equity markets have suffered incredible volatility over the past few days with Asian equities getting trounced on Monday with only minor recovery except in China where the selloff continues. I'm not a huge fan of gold as a long-term investment alternative to equities beyond its safe haven nature, but its definitely seen elevated levels since monetary easing in 2008 which could greatly increase in the event of another financial crisis (look up credit loans swaps for a convincing argument of corporate bank derivative overexposure).
If you want more charts and analysis, check out www.anthonylaurence.com
If gold decides to take a leg lower, we have a strong support level below at a range between 1277 and 1238. The two technical indicators, bull/bear sentiment index and the CCI are suggesting we are approaching relatively expensive levels at the moment and that gold long could be a bit of an overcrowded trade.
However, I can also imagine it takes a leg higher since equity markets have suffered incredible volatility over the past few days with Asian equities getting trounced on Monday with only minor recovery except in China where the selloff continues. I'm not a huge fan of gold as a long-term investment alternative to equities beyond its safe haven nature, but its definitely seen elevated levels since monetary easing in 2008 which could greatly increase in the event of another financial crisis (look up credit loans swaps for a convincing argument of corporate bank derivative overexposure).
If you want more charts and analysis, check out www.anthonylaurence.com