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Trends & Analysis
News

US dollar surges to 7-week high on NFP data

News

Shares of Levi Strauss tumble amid weak sales

News

Crude oil breaches $70 amid geopolitical concerns

News

Will silver soar to $35?

News

Nike’s shares slide despite earnings beat

News

GBP/USD holds close to multi-year highs

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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