Tuesday, November 26, 2019

Why You Should Not Ignore Gold

Safe Haven appeal: Few months back, Gold has given a breakout from long consolidation pattern which suggests start of the bullish trend. Gold is one of the preferred asset classes when uncertainty in economy prevails.
Gold is the hedge against Inflation however as of now situation is different where Inflation in developed economy is not rising. Thus Central banks are trying hard to keep economy back on track. So this time, is Gold moving higher on back of higher Inflation or due to the economy uncertainty ahead?
Following was published in the monthly research report on 7th November 2019 – The Financial Waves monthly update
LBMA Gold Spot Quarterly chart
Technical Outlook:
Golden Era of 10 years: The above Quarterly chart of LBMA Gold Spot indicates that from the year of 1980 to 2000, one of the long consolidations was witnessed. Post that we all know that how prices rallied in exponential fashion from $250 to $1920 between the year of 2001 to 2011. These 10 years were the Golden era for investors as it rose almost 670% from the low of $250.
Sluggish period of almost 8 years: After such kind of massive rise, corrections are the normal behaviour of market. From end of 2011 to the mid of 2018, prices remained under pressure and corrected from the highs of $1920 to the low of $1046 levels.  This is a correction of 45% from the highs.
Inverse Head and Shoulder Pattern: This is one of the simple but important reversal patterns found in technical analysis. Prices formed text book image Inverse H & S Pattern and broke out above neckline in the year of 2019. The breakout has happened with strong momentum which is bullish sign. As per this pattern, Gold is expected to touch the target of $1675 by the mid of 2020.
Bollinger Bands: With this recent breakout, upper and middle Bands of Bollinger has shifted on upside along with MACD crossover above 0 levels. Both these indicators suggest that bullish trend to continue in coming period.
Channels and Trendline:  Recent upward breakout suggests that market can remain in bullish phase. The green upward moving channel as well as trendline which is connecting the prior 2 highs made in the year of 1980 and 2012 suggests that prices to move higher as shown by forecasting lines.
Conclusion: Gold has started its multi-year of bull market and this can continue over next 10 years towards the level of…..
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