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Trends & Analysis
News

Crude oil dips for 3rd session after supply data

News

Is there an AI upside for AMD?

News

GBP/USD recovers following wage report

News

Buy the JPMorgan dip?

News

Goldman Sachs shares surge after earnings beat

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Asset Watch

Will gold keep mystifying the skeptics?

Thursday, March 14, 2024

Befuddled beneficiaries of the recent gold rush are uncertain of what to make of the yellow metal’s ascent. With few tangible fundamental developments to highlight, Standard Chartered analyst Suki Cooper said, “Previously when we have had a rally of $70 to $80, it is usually accompanied by a new catalyst or risk event. But this time there has been no significant shift in current events.”
Even more puzzling, gold has demonstrated a positive correlation with ETF flows since 2004, meaning that when the latter rises and falls, gold tends to follow. Yet, investors’ ETF holdings fell as the yellow metal soared, creating a noticeable divergence.
While the flow data signals a forthcoming correction, the technical outlook remains constructive, and the bulls deserve the benefit of the doubt until this changes.

Gold’s 20-week moving average has been a solid momentum indicator, and the yellow metal held above it during the run to record highs in 2020. Likewise, the 20-week MA acted as support in February/March 2023 en route to another all-time high and ended the pullbacks in November 2023 and February 2024.

 

As a result, the key level (near $2,040) remains the line in the sand. Historical breakdowns produced further weakness and gold struggled to regain its prior peaks for several months. In contrast, long positions were prudent when the yellow metal traded above the 20-week MA.

 

So, will gold shine even brighter in the months ahead, or are correction clouds forming?


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