Gold has always been considered as one of the most important safe-haven assets. The price of gold has soared since the beginning of 2019, but long-term investors in gold should be careful because this rise seems to be more a result of speculation rather than an investment for long periods.
After successfully breaking the psychological support of the 1400 Dollars, the Gold Price reached maximums around $ 1450 and would seem to have consolidated around this price area.
Gold, as asset quoted in dollars, benefited from the fall of the dollar, slightly down after the Federal Reserve’s possibility to review the interest rates in US. For this reason, investors of the US Dollar have more incentive to buy Gold when there are signs of a decline in the US currency, simply because it is cheaper.
“the price of gold has definitely found support and rebounded on the 10-day moving average”
At the US congress, the governor of the FED, Jerome Powell, made it clear by his speeches that the FED would be open to a cut of interest rates already in the next meeting, this highlighted fears about slowing growth and slowing inflation. In fact, the US Department of Commerce found that last June, the annual consumer growth index was 1.6%, down 0.2% compared to the previous April figure (+ 1.8%)
The Federal Reserve Bank of Chicago CEO, Charles Evans, who is also an influential member of the Federal Reserve’s operational board, also raised concerns about low inflation. Indeed, Evans has confirmed concerns for current inflation in the US at the moment, stating that a possible cut in interest rates would bring the cost of living back to the 2% target within two years.
The US macroeconomic data ended with the results of the US producer price index in June, with a small increase of 0.1% compared to the May estimation. The results of the PPI index on an annual basis, on the other hand, it revealed a 1.7% increase, slightly slowing compared to + 1.8%, but still above the + 1.6% indicated of the expectations.
The estimation of net prices on energy and food products, on the other hand, showed a slight increase of 0.3% on a monthly basis (forecasts + 0.2%) and an increase of 2.3% on an annual basis (expectations +2.1 %).
Gold – Technical Analysis
As shown in the daily chart below, for the technical analysis, the price of gold has definitely found support and rebounded on the 10-day moving average (the red line on the chart), which gave a support level in the area of 1.408 dollars, and which therefore it acts as a very short support.
At the moment the support that is even further away is determined by the 25-day exponential moving average (the blue line on the chart), which confirms a very bullish trend for a short-medium term for the technical approach, and it would seem to continue to remain bullish as long as the prices they will be above the 50-day moving average (the green line on the chart).
The main resistance to the upside, on the other hand, is in the $ 1,450 area, a resistance that if exceeded in daily closing or even better in the weekly closing could give the way to further extensions with a first target in the area of 1500.