7월 29, 2020
If the futures market is a sign of where traders believe gold is going, then gold hitting 2000 USD may be closer than we think. As of now, the December contract of Comex gold futures is trading at 1971.40 USD, which is an increase of 16 USD on the day. Taking in to account the speed at which the price of gold has accelerated upwards, 2000 USD per ounce could be a reality sooner than we think.
While many experts forecasted gold hitting 1800 USD, and then 1900 USD immediately after gold broke through the 1800 USD mark. But they missed the boat regarding how rapidly gold would climb to those price levels.
The truth of the matter is since mid-March this year gold has increased by around 500 USD in value. All the more significantly during July gold’s climb went from a steep upside angle to a parabolic rise beginning on July 16. From July 17 till now we’ve seen gold futures gain around 150 USD.
When you review the ascent of gold after the conclusion of the multiyear correction in 2015, it would take gold over 3 years to rise by $500 in value. The rally saw gold prices at lows of 1045 USD in November 2015 to highs of 1500 USD during the week of August 8, 2019. This was the first time we saw the value of gold hit 1500 USD per ounce since the first week of April in 2013.
This comparison clearly shows how rapidly gold prices have risen. The previous rise in gold pricing culminating in a 500 USD gain per ounce took over 3 years to achieve, and in this most recent case, it achieved the same 500 USD gain in just over four months.
So the question becomes what does this mean for the future price of gold, and more importantly, how much higher can gold pricing reach. The short answer is gold could trade altogether higher than current pricing. Generally speaking, the events that have taken gold fundamentally higher in such a limited span of time has not come to any resolution.
The worldwide pandemic has created the new norm we live in today, forcing the hands of every major global bank to have a very accommodating monetary policy that would incorporate interest rates at either near-zero or in some instances negative as well as large amounts of quantitative easing to give the required liquidity and capital for economies globally to stabilize.
Technically speaking it is very hard to utilize traditional forecasting tools. Market technicians depend largely upon historical data to forecast where prices may go. That being said with gold pricing at new record highs these models are basically unavailable. In any case, one technique that is still possible to use is a combination of Fibonacci extensions and Elliott wave theory.
Fundamental Analyst for Global Markets
James has over 20 years of experience trading FX, cryptocurrencies and investments products for a range of investment banks and brokers
He spent the last 10 years analyzing and writing about foreign exchange, crypto-currencies and the global financial markets
He has also spoken at a range of conferences around the globe on various financial topics.