Up, up and away!
Gold is poised to have a fifth consecutive winning week. It has been all smiles for the yellow metal, which has surged in the wake of the Covid-19 pandemic. Since April 1, gold has shot up some 27.3 percent, including a jump of 10.9% in July alone. This upward trend is not all that surprising, given that gold is traditionally a safe-haven asset, which attracts nervous investors in times of crisis. And what bigger crisis than a global pandemic?
At the same time, the fact that gold has punched past the symbolic USD2000 level (for the first time ever) and continues to hit new records is an impressive feat and raised investor sentiment towards gold. Gold touched a record high of USD2075 earlier on Friday, and the skies appear to be bright blue for the metal, with the US and other major economies still trying to control the worst pandemic the world has witnessed in 100 years. Some analysts have talked about gold hitting the USD2500 level. This may seem far-fetched, but keep in mind that exactly a year ago, gold was trading at USD1420, and anyone talking about the USD2000 level being broken would have been shown the door in a hurry.
In the meantime, the trend is firmly upward, and if Friday’s nonfarm payrolls fail to meet expectations, we could see gold gain some ground before the trading week is over.
XAU/USD Technical
XAU/USD is currently trading at USD2057.15, down 0.29% on the day. The pair posted small losses in the Asian session and has been flat in European trade
- The round number of 2000 is a major support level. Below, there is support at 1979, which is near the 10-day MA line
- The pair tested resistance at 2070 in the Asian session, but has retreated. The next resistant line is at 2087.
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