Hello dear readers,
today I would like to present a more detailed analysis on gold.
(Since I'm active in the German-speaking region, I'm unfortunately unable to link charts due to my inactivity in the English-speaking region). Therefore, I would like to refer interested parties to my German-language analysis, where you can view the charts for the different timeframes. Thank you for your understanding.
Fundamental reasons for the rally:
Gold has gained approximately 18% YTD. This can be attributed to several fundamental reasons. Firstly, it should be mentioned that the major central banks (FED/ECB) are expected to conduct the first interest rate cuts of the year. This makes gold as a non-interest-bearing asset more attractive. Additionally, there is increasing escalation in geopolitical tensions, particularly in the Middle East, Ukraine, and other tensions in Taiwan. This leads investors to increasingly rely on the safe-haven asset of gold. Furthermore, central banks from emerging markets are increasingly expanding their gold reserves as part of de-dollarization policies. This particularly affects the PBOC, which has seen net inflows for 17 months, followed by India and Kazakhstan. Overall, gold has seen net inflows from central banks for about 9 months, driving the ongoing rally. Furthermore, it should be noted that there is growing interest in gold, especially in the retail market in the East. This is because it is increasingly evident how assets of Russians in the West are being frozen or confiscated, making gold a safer and more attractive investment.
Short-term:
Gold has been in a Cup-and-Handle formation since 2011. After completing the correction at the 0.5 Fibonacci retracement level of the upward movement from September 2019 to August 2020, thus completing the "Handle" of the Cup, we transitioned to an "Ascending Triangle" and an "Inverse Head and Shoulders Pattern". At the end of 2023, there was a breakout from both formations to the upside, followed by a test of the former resistance in early 2024, confirming the breakout. The target of the "Ascending Triangle" and the "Inverse Head and Shoulders Pattern" was reached at $2400 per ounce. Currently, the Relative Strength Indicators (RSI) are in overbought territory, with a slight bearish divergence in the daily chart, indicating a possible correction.
A strong support zone seems to lie in the range of $2150-2200 USD, as there is volume there and both the 0.5 and 0.618 Fibonacci retracement levels (Golden Pocket) of the last upward movement since mid-February 2024 can be found there. Additionally, the daily 20 and 50 EMAs are in this price range. Therefore, there is a good chance that a correction from the current price levels will occur in the range of $2150-2200 USD.
Midterm (around the end of the year):
In the medium term, it's also evident that the RSI is strongly in overbought territory. Additionally, the clear rejection seen in the candles of last week indicates selling pressure in the $2400 per ounce zone. In the event of a potential correction, it's noteworthy that the Point of Control is located at the 0.618 Fibonacci retracement (Golden Pocket) of this year's rally movement (since Feb. 2024) ($2160 per ounce), where the 20-week EMA also resides, forming a strong support zone.
If such a correction occurs, applying the Fibonacci Extension tool leads to a medium-term target after the correction of approximately $2600 per ounce, which aligns with the long-term Fibonacci Extension of the upward movement from June 2019 to March 2021. With sufficient momentum, there could also be an upward move towards the 1.272 Fibonacci Extension level ($2700 per ounce). The potential direction of movement is depicted by the arrows.
Long term (plus one year):
I believe that gold has initiated a new phase of upward trend in the long term. From 2013 to 2019, we were in the accumulation phase, and now a new phase begins with a possible target of $3500 per ounce, if we take the Cup-and-Handle formation as a basis. I believe that the various Fibonacci Extension levels will be gradually met, with occasional corrections in between. As long as gold remains above the monthly 20 EMA, I believe we can maintain the bullish momentum. However, a drop below this level could invalidate the aforementioned projections and lead to a deeper correction towards $1700-1800 per ounce.
Looking at the gold chart in the broader timeframe, it appears that gold moves in three phases: expansion, correction, accumulation, and repetition. The expansion begins after breaking through the old all-time high of the previous bull market. This exact situation is also present here, which is why I am bullish in the long term. Additionally, intensifying geopolitical tensions and the general trend of de-dollarization further support gold's long-term growth.
As Always this is NO Financial Advice
today I would like to present a more detailed analysis on gold.
(Since I'm active in the German-speaking region, I'm unfortunately unable to link charts due to my inactivity in the English-speaking region). Therefore, I would like to refer interested parties to my German-language analysis, where you can view the charts for the different timeframes. Thank you for your understanding.
Fundamental reasons for the rally:
Gold has gained approximately 18% YTD. This can be attributed to several fundamental reasons. Firstly, it should be mentioned that the major central banks (FED/ECB) are expected to conduct the first interest rate cuts of the year. This makes gold as a non-interest-bearing asset more attractive. Additionally, there is increasing escalation in geopolitical tensions, particularly in the Middle East, Ukraine, and other tensions in Taiwan. This leads investors to increasingly rely on the safe-haven asset of gold. Furthermore, central banks from emerging markets are increasingly expanding their gold reserves as part of de-dollarization policies. This particularly affects the PBOC, which has seen net inflows for 17 months, followed by India and Kazakhstan. Overall, gold has seen net inflows from central banks for about 9 months, driving the ongoing rally. Furthermore, it should be noted that there is growing interest in gold, especially in the retail market in the East. This is because it is increasingly evident how assets of Russians in the West are being frozen or confiscated, making gold a safer and more attractive investment.
Short-term:
Gold has been in a Cup-and-Handle formation since 2011. After completing the correction at the 0.5 Fibonacci retracement level of the upward movement from September 2019 to August 2020, thus completing the "Handle" of the Cup, we transitioned to an "Ascending Triangle" and an "Inverse Head and Shoulders Pattern". At the end of 2023, there was a breakout from both formations to the upside, followed by a test of the former resistance in early 2024, confirming the breakout. The target of the "Ascending Triangle" and the "Inverse Head and Shoulders Pattern" was reached at $2400 per ounce. Currently, the Relative Strength Indicators (RSI) are in overbought territory, with a slight bearish divergence in the daily chart, indicating a possible correction.
A strong support zone seems to lie in the range of $2150-2200 USD, as there is volume there and both the 0.5 and 0.618 Fibonacci retracement levels (Golden Pocket) of the last upward movement since mid-February 2024 can be found there. Additionally, the daily 20 and 50 EMAs are in this price range. Therefore, there is a good chance that a correction from the current price levels will occur in the range of $2150-2200 USD.
Midterm (around the end of the year):
In the medium term, it's also evident that the RSI is strongly in overbought territory. Additionally, the clear rejection seen in the candles of last week indicates selling pressure in the $2400 per ounce zone. In the event of a potential correction, it's noteworthy that the Point of Control is located at the 0.618 Fibonacci retracement (Golden Pocket) of this year's rally movement (since Feb. 2024) ($2160 per ounce), where the 20-week EMA also resides, forming a strong support zone.
If such a correction occurs, applying the Fibonacci Extension tool leads to a medium-term target after the correction of approximately $2600 per ounce, which aligns with the long-term Fibonacci Extension of the upward movement from June 2019 to March 2021. With sufficient momentum, there could also be an upward move towards the 1.272 Fibonacci Extension level ($2700 per ounce). The potential direction of movement is depicted by the arrows.
Long term (plus one year):
I believe that gold has initiated a new phase of upward trend in the long term. From 2013 to 2019, we were in the accumulation phase, and now a new phase begins with a possible target of $3500 per ounce, if we take the Cup-and-Handle formation as a basis. I believe that the various Fibonacci Extension levels will be gradually met, with occasional corrections in between. As long as gold remains above the monthly 20 EMA, I believe we can maintain the bullish momentum. However, a drop below this level could invalidate the aforementioned projections and lead to a deeper correction towards $1700-1800 per ounce.
Looking at the gold chart in the broader timeframe, it appears that gold moves in three phases: expansion, correction, accumulation, and repetition. The expansion begins after breaking through the old all-time high of the previous bull market. This exact situation is also present here, which is why I am bullish in the long term. Additionally, intensifying geopolitical tensions and the general trend of de-dollarization further support gold's long-term growth.
As Always this is NO Financial Advice