Spot Gold with a new all-time high, 2,000 USD – here we come!

By Admiral Markets

Source: Economic Events July 29, 2020 – Admiral Markets’ Forex Calendar

Gold started the trading week with a bang, marking a new all-time high and levelling the path to 2,000 USD after Gold Futures also made new all-time highs over the last week of trading.

Today’s main focus will certainly be the Fed and its rhetoric. Currently, it seems as if the push higher in precious metals, despite recently solid US economic projections, came mainly in anticipation of the inevitable second economic stimulus from the US government, announced over the last weekend.

The White House and Senate Republicans introduced a 1 trillion USD spending bill on Monday, released in stages, aiming mainly to provide unemployment insurance while further negotiations will take place in the upcoming weeks.

What will be of interest in regards to the Fed, is that on Wednesday the US central bank has already offered an idea of how it plans to act “monetary wise”. The latest data shows that the Fed balance sheet stabilises slightly below 7 trillion USD, mainly due to Foreign central bank liquidity swaps continuing to drop while bond purchases from the Fed continued to rise.

Should the Fed now fail to add further fuel in terms of a very dovish rhetoric, Gold could see a sharp correction.

Sentiment-wise, a drop like this wouldn’t come as a big surprise since, after the seventh consecutive weekly gain, the returns after 7-week streaks (which took place 11 times since then) were all negative for the upcoming week since the 1980s.

Still, the mid-term outlook for Gold stays positive with us seeing a deep run above 2,000 USD in the months to come, technically on a daily timespan as long as we trade above 1,660 USD:

Source: Admiral Markets MT5 with MT5-SE Add-on Gold Daily chart (between April 23, 2019, to July 28, 2020). Accessed: July 28, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of Gold fell by 10.4%, in 2016 it increased by 8.1%, in 2017 it increased by 13.1%, in 2018, it fell by 1.6%, in 2019, it increased by 18.9%, meaning that after five years, it was up by 28%.

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