Gold investment: will the impact be long-lasting? Gold “diamond grade” bottom support!

International spot gold was at $1,714.10 an ounce in Asian trading on Thursday. Gold price maintained the trend of volatile decline, intraday low hit $1711.40 / oz, since the day high has fallen more than $8, the current continues to maintain the momentum of pressure shock.

Gold retreated in the previous session as the dollar strengthened and investors took profits, but fears of a global recession helped support a bottom.

Bart Melek, head of commodities strategy at TDS in Toronto, said gold had been following the trend of equities, which sold off on Wednesday, and a stronger dollar as people adjusted their portfolios in response, leading to a pullback.

Underlining the extent of the economic damage caused by COVID 19, the IMF expects the world economy this year to suffer its worst downturn since the great depression of the 1930s as global crude prices continue to collapse and global stock markets weaken again.

Meanwhile, the dollar rallied on safe-haven demand amid growing fears that the damage to the global economy from the outbreak will be protracted, with continued risk aversion providing a strong floor for gold.

Overall, gold prices remain not far from their highest level in more than seven years, buoyed by fears of a global recession, a combination of stimulus from central Banks and governments and a new frenzy of buying by investors in gold exchange-traded funds.

Commerzbank analyst Carsten Fritsch thinks gold could hit $1,800 an ounce by the end of the year.

Meanwhile, analysts expect gold prices to rise to $2,000 an ounce this year, but this may not be the right time to buy.

Bill Baruch, President of Blue Line Capital, said technical indicators suggest gold has even more room to rise.

Baruch said he believes gold will hit $2,000 for the rest of the year. I think it should be in your portfolio. The flood of liquidity injected by the fed will support asset prices, such as equities, but it will also support gold.”

Despite the current momentum, Baruch is reluctant to chase gold higher here. Instead, he sees an opportunity for a pullback should one occur.

“Gold will go higher, but a fall back to $1,700 is a buying opportunity,” Baruch said.

Technical analysis:

The dollar

On the daily chart, the dollar index has rebounded modestly from its lows, the MACD green momentum column has slightly narrowed, and the KDJ random index has turned higher, indicating that the dollar’s rally momentum is restarting, and the next expected to continue a moderate rally.

On the 4 hour chart, the dollar index maintained a moderate rally, the MACD red momentum column slightly expanded, the KDJ random index moderately higher, indicating that the dollar short-term rally momentum is also strengthened, the next expected to continue to rise moderately.

gold

On the daily chart, the gold price rose and then fell, the MACD red kinetic energy column narrowed, the KDJ random index turned to moderate decline, indicating gold retracement momentum to restart, and then may continue to decline since the high.

On the 4-hour chart, gold continued the downward pressure trend since the peak, the MACD green momentum column slightly expanded, the KDJ random index continued to moderate decline, indicating that gold short term will continue to decline.

fundamentals Positive factors:

  1. According to statistics from real-time information and data update website world meters, as of 10:15 Beijing time on April 16, the global cumulative number of confirmed COVID-19 cases has exceeded 2.08 million, of which 2,083,304 have been confirmed and 134,615 have died and more than 130,000 have died.
  2. U.S. retail sales fell a record in March as a forced shutdown to contain the spread of novel coronavirus crimped demand for a range of goods, leading to the biggest drop in consumer spending in decades. Retail sales fell 8.7% in March, the Commerce Department said Wednesday, the biggest drop since it began tracking the data in 1992, after a revised 0.4% decline in February. The figure was below expectations and the consensus forecast was for an 8 percent fall.
  3. The New York fed’s manufacturing index plunged to -78.2 in April, the lowest level on record and worse than during the great depression.
  4. The global economy is on track for the worst financial crisis since the Great Depression this year as governments around the world grapple with the global crisis, the international monetary fund said on Tuesday. The IMF now expects the global economy to contract by 3 percent by 2020. In January, by contrast, it forecast that global GDP would grow by 3.3% this year. “The global economy is likely to experience its worst recession since the great depression this year, surpassing the recession during the global financial crisis a decade ago,” said Gita Gopinath, the IMF’s chief economist, in the latest world economic outlook.

Fundamental negative factors:

  1. US President Donald trump said on Wednesday that the us had passed the “peak” of the coronavirus outbreak. On Thursday he will discuss guidelines for reopening the United States. Now trump has canceled plans to set up a new task force to revive the economy and instead has held a series of phone calls with business leaders, according to two sources.
  2. German chancellor Angela Merkel said on Wednesday that her country would begin easing restrictions on its economy from April 20. Shops under 800 square meters can be reopened if measures are taken to “keep them clean”.
  3. On Tuesday, China’s exports fell 6.6% in March from a year earlier, lower than economists’ forecasts of a 14% drop. Imports fell less than 1 percent from a year earlier, below economists’ forecasts of a 9.5 percent drop. Risk sentiment returned after better-than-expected economic data from China.
  4. The head of the centers for disease control and prevention said on Monday that the United States is close to the peak of the outbreak. The outbreak in the United States is stabilizing and the number of COVID 19 cases in the United States is expected to begin to decline in the coming days.

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