Will the price of gold surprise us yet?

In response to the question contained in the subject, you can of course expect extreme reactions, in the form of even higher prices or a solid downward correction. The price of gold even has a series of very good increases of several months. Where does this euphoria come from? It is largely reflected in global concerns over coronavirus. Gold belongs to the so-called basket assets. safe haven. It is one of the most-bought investment instruments in times of global threats. Therefore, the demand for them is fully justified. Of course, it appears on the market in various forms. The weakening of the dollar may contribute to its further and stable growth. In fact, cheap money on the market is one of the factors supporting the increase in the price of gold. Are we currently dealing with really poor valuations of currencies? Is this only an illusion?

The price of gold and short-term barriers

Investing in gold has a goal almost lost in the minds of many investors. When purchasing this ore, we usually have the idea of ​​long-term earnings or capital protection for the future. The short investment horizon is not associated with gold. However, looking at the quotations of this asset, one can distinguish several short-term points in the current trend, which may mix up its valuation. We don't just want to argue about a possible correction. There is a good chance that it will come soon. Some investors will want to cash in on investment returns and invest them in a market emerging from the viral recession.

Gold chart, interval D1. Source: xNUMX XTB xStation

Looking at the daily gold chart, we can quickly see that the last support (determined by the peak) was successfully defended (green arrows). Therefore, at a price of around USD 1688 per ounce, demand was on the market and it was ready to buy small declines. The breakout and maximum price achieved from the candle, on which the wick based the blue line is a good, short-term place where the upward trend could potentially slow down. For now on the market we could observe the first price test around USD 1746,63 per ounce. The supply rebound does not necessarily mean that the market has collapsed, but about sellers who sell their positions here.

The strength of buyers

Currently, they are enjoying great demand ETF'y for gold. Recently, these funds have acquired additional amounts of ore. The level they have oscillates around 3,5. tons of gold. The flow of cash to the market obviously contributed to placing them in a safe haven. However, the question arises as to how much cash is still in the hands of investors willing to place it in this asset.