Gold investments: why the rally? Gold prices are soaring! At one point yesterday it was up nearly $60! Behind these factors!

International spot gold was trading at $1, 659.50 an ounce on Tuesday morning in Asia. Since the start of the week, the gold price has continued to rise sharply, closing up for four consecutive trading days, rising nearly $60 at one point in the previous session, and finally closing up more than $40. Gold extended gains to a high of $1,672.00 an ounce and is currently trading in a narrow range near the high.

Gold prices surged more than 2 per cent in the last session to hit a more than three-week high on expectations of global stimulus measures to deal with the economic damage caused by the COVID 19 outbreak.

Gold opened at $1,616.72 an ounce in early Asian trading on Monday, rising as high as $1,668.70 an ounce and dipping as low as $1,607.90 to close at $1,660.52, up $43.11, or 2.67 percent.

Meanwhile, the COMEX gold futures contract for June ended up $48.2 an ounce, or 2.93 percent, at $1,693.9 after briefly breaching the $1,700 mark.

Japan will declare a state of emergency as early as Tuesday in Tokyo and six other prefectures and cities to contain the spread of novel coronavirus, according to market sources. And the Japanese government is reportedly preparing to roll out a $990 billion stimulus package to ease the economic impact of the outbreak.

Meanwhile, German chancellor Angela merkel said on Monday that novel coronavirus was the biggest test facing the European Union. What is important is that the eu remains strong in the midst of an economic crisis triggered by the epidemic.

In addition, governments and central Banks around the world have launched unprecedented fiscal and monetary stimulus and other support measures to support economies hit by the COVID 19 pandemic.

“Physical demand continues to dominate the market and support gold,” said Phil Streible, chief market strategist at Blue Line Futures. At the same time, the massive stimulus effectively diluted the currency, so demand for gold came from all directions.

‘we believe the foundation for a multi-year bull market is strengthening as monetary and fiscal stimulus bites and interest rates stay near zero,’ said analysts at td securities. This suggests investors will continue to seek gold’s value as a store of value as global real interest rates slide into negative territory.

Citigroup sees a price target of $1,700 for the next one to three months and $1,900 for the next six to 12 months. Gold could rise as high as $1,704 an ounce in the short term as an exceptionally weak U.S. labor market pushes money into the metal for safety and limits its decline.

Technical analysis:

The dollar

On the daily chart, the dollar index maintained its rally from its recent lows, with the MACD red momentum column expanding slightly and the KDJ random index slightly tilted upward, indicating that the dollar rally momentum remains and may continue to move upward.

On the 4 hour chart, the dollar index after a slight fall, MACD red kinetic energy column unchanged, KDJ random index slightly more pressure, indicating the dollar short – term upward momentum weakened, then or continue to fall slightly.

gold

On the daily chart, gold held steady in the recent rally, the MACD red momentum column amplified, the KDJ random index moderately higher, indicating that gold may extend the rally further.

On the 4 hour chart, gold prices after a slight fall, MACD red kinetic energy column unchanged, KDJ random indicators slightly more pressure, indicating that gold short term may continue to fall.

fundamentals Positive factors :

  1. According to statistics from real-time information and data update website worldometers, as of 9:34 Beijing time on April 7, the global cumulative number of confirmed COVID 19 cases has exceeded 1.34 million, with 1,346,566 confirmed cases, over 70,000 deaths, 74,697 cases and 278,695 cases cured.
  2. The epidemic in the United States is spreading at a faster pace. The latest data shows that as of 9:34, Beijing time, the number of newly confirmed cases in the United States has risen to 367,004, with a total of 10,871 deaths and 19,671 cures. New York state was the hardest-hit state, with 131,916 confirmed cases and 4,758 deaths, according to the data.
  3. British prime minister Boris Johnson’s condition is reported to have deteriorated and he has been transferred to intensive care unit. A spokesman for the prime minister said foreign secretary and first minister alvaro raab had been asked to act as acting prime minister if necessary.
  1. US President Donald trump said he did not like India’s decision on hydroxychloroquine and may retaliate against India’s decision on drugs.

Fundamental negative factors:

  1. The European Commission is said to be considering relaxing the rules on state aid and is considering a proposal that would allow EU member states to help companies with capital injections.
  2. Italy reported its lowest death toll in more than two weeks on Sunday. The daily death toll was also falling in France and the number of new cases in Germany fell for the fourth consecutive day.
  3. April 1 the federal reserve reduced the likelihood of a dollar crunch by expanding the ability of dozens of foreign central Banks to obtain dollars during the novel coronavirus crisis, allowing them to swap their holdings of U.S. debt for overnight loans in dollars.
  4. Russia’s central bank said it would stop buying gold from April 1, without explaining why.

Leave a Reply

Your email address will not be published. Required fields are marked *