Gold Outlook - Not a Safe Haven Anymore?
- How likely or unlikely is it that the gold bounce keeps going strong?
Gold rallied from the July lows of $1077 to test the $1167 level. Gold is believed to be a safe haven where investors put their money during periods of economic uncertainty.
During the last economic recession, gold price rallied to over $1920. Unfortunately, this level has been the highest price since 2011. The introduction of Quantitative Easing by the FED in order to stimulate the economy has eventually put gold in a bear market.
The market is anticipating a rate hike from the FED as early as September. This is bad news for gold bulls because it will have a negative impact on the price of gold. This means that gold prices are more likely to go lower than we saw in July.
Yesterday, the market saw the biggest Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term so far in 2015, the DOW dropped 1000 points and the market witnessed a massive sell on USD, with risk-off currencies appreciating massively. I was a little bit bothered as to why there wasn't any meaningful rally on the price of gold.
Last Friday, the market rallied to $1167 before the market closed for the weekend. Gold prices opened on Monday for trading at $1164 and the high of the day was $1169. On a trading day when investors were so uncertain about the state of the world economy, I would have expected more money to flow into gold, it being a safe haven, and the price of gold to rally all the way to at least $1200 resistance level. However, the price slid all the way down to a daily low of $1145.
Technically it’s clear we are in a bear market and the rally to the upside was confirmation of a final leg down of price to less than $1000. If prices continue to trade below $1185, we could see prices at less than $1000 before the end of the year.
Bloomberg 24- hour gold chart
Gold rallied from the July lows of $1077 to test the $1167 level. Gold is believed to be a safe haven where investors put their money during periods of economic uncertainty.
During the last economic recession, gold price rallied to over $1920. Unfortunately, this level has been the highest price since 2011. The introduction of Quantitative Easing by the FED in order to stimulate the economy has eventually put gold in a bear market.
The market is anticipating a rate hike from the FED as early as September. This is bad news for gold bulls because it will have a negative impact on the price of gold. This means that gold prices are more likely to go lower than we saw in July.
Yesterday, the market saw the biggest Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term so far in 2015, the DOW dropped 1000 points and the market witnessed a massive sell on USD, with risk-off currencies appreciating massively. I was a little bit bothered as to why there wasn't any meaningful rally on the price of gold.
Last Friday, the market rallied to $1167 before the market closed for the weekend. Gold prices opened on Monday for trading at $1164 and the high of the day was $1169. On a trading day when investors were so uncertain about the state of the world economy, I would have expected more money to flow into gold, it being a safe haven, and the price of gold to rally all the way to at least $1200 resistance level. However, the price slid all the way down to a daily low of $1145.
Technically it’s clear we are in a bear market and the rally to the upside was confirmation of a final leg down of price to less than $1000. If prices continue to trade below $1185, we could see prices at less than $1000 before the end of the year.
Bloomberg 24- hour gold chart