Dear Valued Readers & Supporters,
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| Gold Future Weekly Chart |
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| US Inflation Rate: Source Tradingeconomics.com |
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| Correlation Between US Dollar and Gold |
I saw an opportunity so i am sharing an analysis on Gold Futures which is an opportunity up for grab?
Above charting illustration shows Gold Future depict GOLD futures is consolidating in a range, will there be a breakout to the upside target of 2100 USD or a failed futile attempt false breakout or breakout to the downside trget of 1500 USD？
There are many maecro events which will cause Gold Future to breakout or breakdown?
1) Geopolitical conflict - US Russia Ukraine first & US China Taiwan next.
2) Hyper inflation caused by Cost Push and Demand Pull inflation with supply chain disruptions of transporting products, goods and commoditites raw materials, containers jammed and shut down of ports due to widespread of omicron covid-19 variant, Suez Canal toll fee to rise by 6% in February 2022. Including Gold in the portfolio is a good hedge of inflation where correlation is positive.
3) correlation between US dollar and commodities, where US dollar has an inverse relationship with commodities denominated in US dollar settlement. devaluing of US dollar will made commodities attractive as a hedge.
Technical Analysis suggest Gold was consolidating in a symmetric triangle range, could breakout anytime and a new trend will be establish to the upside. Gold all time high was in August 2020 where price reach was 2089 USD and it had since pullback and drawdown from all time high to March, April and August 2021 low of 1673, 1677 and 1677 respectively. Using simple math to calculate the drawdown is 2089 (high) -1673 (low) = 416 / 2089 = 19.91% drawdown from all time high in August 2020.
Gold could reach price level range between 2717 USD to 3000 USD (psychological resistance) on a longer timeframe where current secular Bull market for commodities continued since year 2000 on China growth story, strong appetite demand for commodities. Using simple math to calculate the forecast 2089 (high) minus 1045 (december 2015 low) = 1044 + 1673 (recent low in March 2021) = 2717 USD.
In conclusion, gold upside in this secular bull market for commodities continued on the backdrop of a possible proxy geopolitical war of Russia Ukraine and China Taiwan, both Russia and China view Ukraine and Taiwan as their national security and terms set out for peaceful resolution where Ukraine should not join NATO and Taiwan Independence will trigger the war to breakout. couple with inlfation out of control as a result of Quantitatice Easing (QE) increasing money supplies M2 to stimulate economic disruptions caused by Covid 19.
I wish my readers and supporters success in their investment journey.
Disclaimer: All news, information and charts shared is purely by my research and personal views only. This is not a trading recommendation or advice but on the basis of sharing information and educating the investment community. Different traders and investors adopt different trading strategies and risk management approach hence if in doubt please approach or seek clarifications with your Financial Adviser, Broker and Banker.
