The spot price of gold is consolidating just above the threshold of $1,700 in a scenario where investors remain bullish on gold but require fresh stimuli to generate another rally. In particular, we need to note that risk-on has dominated the last few weeks on stock markets, with a huge recovery after March’s sharp fall. This means that many investors have moved some of their liquidity back to stocks, hoping for a quick buck. Of course, if this scenario changes gold can be king again and price could climb above its recent peaks.
Investors are betting on a V-shaped recovery for economies and a similar scenario on oil demand. Moreover, they are seemingly confident that there will be space in Cushing’s oil tanks at the expiries of the contracts in the coming months. All this sounds a bit too optimistic but what we have seen is that in just three weeks the price of the June WTI contract has trebled from the bottom reached on April 20-21 at $7, when the May contract finished its life in negative. It is currently above $24 amid lower volatility in a market trying to consolidate after the brutal moves of the last few weeks.
Chief analyst at ActivTrades and technical analyst for Italian newspaper 'La Stampa'. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a weekly commentator for CNBC Italy and a columnist for La Stampa. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a 250-pages book on gold and the gold market, followed in 2018 by a new updated edition.
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© 2019 High Leverage FX - All Rights Reserved.