Gold Prices Reach An New All-Time High

Gold’s price has been increasing for the past 2 weeks but saw significant gains mainly on Friday and early this morning. Another factor investors should note is that the demand is not solely coming from the US trading session but rather all 3 trading sessions (Asian, European & US). Why is Gold again renewing its highs?

The first factor that investors need to take note of is that the price of all commodities have been rising over the past 2-weeks. Here we can see that commodities in general are seeing demand and lower supply, not solely Gold. The second factor is that China is still noticeably increasing their reserve in Gold as the country looks to enhance its currency. Additionally, the country is looking to de-Dollarize ahead of the US elections. China has considerably increased their orders for the commodity and investors should note that the Renminbi has become the fifth most traded currency in the world.

Economists attribute the higher price largely to increased orders from specific countries. Additionally, some investors are forecasting a rate adjustment from the Federal Reserve following a slight inflation decline from 3.5% to 3.4%. However, traders should note that the Fed’s representatives are not altering their stance. Loretta Mester mentioned that reaching the 2% inflation target will take longer than anticipated, but maintaining current interest rates will help reduce price pressures. She added that the US Fed needs more evidence of inflation reduction before it can start easing monetary policy.

Technical analysis continues to point towards an upward price movement including the VWAP, Moving Averages and Bollinger Bands, though the price is understandably overbought on most oscillators including the RSI. However, based on the previous two impulse waves on the daily chart, the price potentially can increase a further 2-3% before losing momentum if it is going to follow previous patterns.