The extended period of risk-on finally hit gold with the price breaking the support level of $1,850 to plunge to the lowest level since July. This negative correlation with risk is nothing new for gold as investors are continuing to invest in riskier assets instead, betting on a quick solution to Covid-19. The acknowledgement of Biden’s victory from the Republicans is likely to reduce the risk of further tensions and represents a supportive element for stocks, while haven assets such as gold are suffering. Therefore, we have seen a new decline of bullion, which is now in a danger zone as many stop losses and profit-taking measures were set to be triggered below $1,850.
As mentioned, despite the dominant risk-on scenario, central banks will still be forced to print a huge amount of money and this could revamp investors’ interest for gold in the near future.
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.
© 2019 High Leverage FX - All Rights Reserved.
© 2019 High Leverage FX - All Rights Reserved.