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Trends & Analysis
News

Week Ahead Preview: 17th of February

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Trends & Analysis
News

Week Ahead Preview: 17th of February

News

Europe stocks hit record high on strong earnings

News

BRIC currencies mostly gain as US inflation rises

News

Refresh your portfolio with Coca-Cola?

News

GBP/USD price may rally to multi-week high

News

EIA ups oil output forecast, but supply fears loom

Asset Watch

Is gold headed to $3,000?

Thursday June 27, 2024

As economic growth weakens, and central banks become less restrictive, non-yielding assets like gold could shine bright alongside the macro shift. Bank of America analysts are calling the yellow metal a long-term value store, hedge against inflation, and effective portfolio diversifier, as they see another upside catalyst entering the equation.
“Ongoing central bank purchases are also important, and a push to reduce the share of USD in foreign exchange portfolios will likely prompt more central bank gold buying,” the analysts said.
With the team betting on $3,000 over the next 12 to 18 months, how can you position for further gains and still manage risk?

Well, if history is any indication, you should pay close attention to gold’s 10-month moving average. It was a major support level, and gold didn’t close below it during the 2009 to 2011 bull run. Likewise, a similar dynamic occurred in 2019-2020, as the March 2020 intramonth dip was bought, and the yellow metal closed above the 10-month MA.

The 10-month MA is acting as support in November and December 2023, and February 2024, so long-term bulls may have a good reason to be optimistic when the yellow metal trades above it.

Gold is meaningfully above its 10-month MA now, and sharp spurts during 2009-2011 and 2019-2020 were followed by cooling-off periods. As a result, gold may consolidate and eventually reconnect with its 10-month MA. But, if it does, it could be an attractive entry point for those who share BofA’s optimistic outlook.

So, are the stars aligned for gold to shine, or will a correction hit before this bull market resumes?


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