📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Gold's Monumental Surge to All-Time Highs

Published 12/04/2023, 05:59 AM
Updated 03/21/2024, 07:45 AM

On Friday and Monday, we saw legendary moves in gold. On Friday evening, the price rose to $2075 on the background of risk appetite with reduced liquidity in the instrument. On Monday, the price of gold reached $2145, a new historical price maximum.

Legendary moves in gold

The nature of the movement on Friday and Monday morning suggests that we have seen the bears in gold wash out of the market. As liquidity returned, the price pulled back to $2060. This is still extreme territory, as the price only spent a few hours above.

Among the bullish technical signals, we note the Golden Cross formed when the 50-day moving average exceeded the 200-day moving average. In addition, the price is above this crossover, which also strengthens the bullish signal.

Still, joining the upward move in gold may be too dangerous right now. On the daily charts, the RSI is flirting with overbought territory, creating correction risks. The upward movement generally fits into a Fibonacci pattern with an initial impulse from $1810 to $2007, followed by a correction to $1932. The realisation of this pattern suggests a 161.8% retracement of the initial rise to 2129.

Previously gold made highs in 2011 and three times in 2020-2023

This is a fairly accurate execution of the pattern, given the low-liquidity trading hours and historical highs.

The next few days for gold are decisive for the subsequent trend. The ability to hold above $2050 will point to continued extreme bullish sentiment in the precious metals market.

The previous three times that gold made highs - in 2011 and three times in the last three years - it went into a sharp and deep correction that lasted for years in the first case and months in the aftermath of the pandemic.

The latter scenario looks more likely, given lower inflation fears and attractive yields in bonds, gold's main competitor.

The FxPro Analyst Team

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.