This month of March 2020 saw the price of gold rise to $1700 per ounce. This is the highest that the yellow metal has been worth since December 2012.
Many experts are claiming that the novel Coronavirus which has so far killed close to 18,000 people and crippled major world currencies is largely the cause as people dump fiat currencies in preference for gold.
But are they right?
As an investor seeking to invest in gold, you have probably gathered tons of similar information as you try to make the smart choice.
But, who do you trust? Where do you find reliable forecasts? What are the experts saying? How is the technical aspect looking like? What factors determine the price of gold, and more importantly, what is the future forecasts of gold price?
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- The Historic and Recent Price of Gold in AUD and USD >
- 2020 Gold Price Forecast, Trends – Expert Opinions and Forecast >
- Our Verdict on Gold Price >
- What You Should Know About Gold Price in Future? >
- What Makes The Price Of Gold To Move Up Or Down? >
- Is This A Good Time To Invest In Gold? >
- Investing In Gold (XAUUSD) On Mitrade Australia >
- Final Thoughts >
Let’s see how the prices of this precious commodity have been over the years in US dollars and Australian dollars as these currencies carry a tight correlation with the metal.
Below is the Gold vs US Dollar (XAUUSD) chart since 2009:
We can see that since 2009, the XAUUSD pair began with upward momentum that saw the price climax at around $1,920 in 2011.
Thereafter, it dropped to its lowest-ever rate of about $1,045 in December 2015.
Since then, the price of gold in USD has been ascending.
Next, we see the chart of Gold vs Australian Dollar (XAUAUD) since 2009:
Just like the XAUUSD pair, the price of gold in AUD took off with an uptrend, hit a high of about AUD 1,833 before it took a nosedive and hit its all-time low rate of AUD 1,274 in June 2013.
Ever since, the XAUAUD has been on a sustained upward trend, having hit its all-time high of AUD 2, 759 in March 2020.
One thing for sure is that in both currencies, the price of gold has been increasing. Even though it slumps sometimes due to reasons we shall discuss later, it still manages to dust itself and resume its journey north.
However, what are the experts saying about the gold trend for the remaining part of 2020 and the future?
While predicting the future performance any instrument can have an aspect of guessing in it, some experts have been right in the past.
In this section, we shall look at some of these experts and what they said about the price of gold in 2020.
We shall also highlight some predictions about the metal for the remainder of 2020 and the future beyond.
1. Paul Tudor Jones - $1,700 ✔️
In June 2019, Paul Tudor, the Founder and CEO of the Tudor Investment Corporation named gold as his “favorite investment for the next 1 and 2 years.”
His opinion was that due to the expected reduction of interest rates in the United States, gold would shoot towards the $1,700 level. It seems he was right as we have already touched that level.
2. Greg Jensen - $2,000 ❌
Greg Jensen, who is the co-CIO of the Bridgewater Associates, has predicted the rate of the yellow precious metal to reach and pass the $2,000 level in 2020.
According to him, the loose monetary policy of the feds, rising inflation, deteriorating relations between the US and other nations, as well as trade deficits will all favor the price of gold.
Hard as it might appear, we can only wait and see if Jensen is right, owing to the current explosion of gold’s uptrend.
3. Jim Cramer - $1,700 t0 $1, 800 ✔️
The host of the Mad Money show on CNBC, Jim Cramer, predicts that the price of the metal will attain the $1,700 level and even go as high as $1,800.
He bases his opinion on the sour relationship between the US and Iran as well as investors worldwide turning to gold as the haven for preserving wealth.
We have already tested the $1,700 level, but shall we get to 1,800?
4. Omkar Godbole - $1,850 ❌
Omkar Godbole is a celebrated analyst on FXStreet. He believes that this year, gold will rise above the $1,850th mark.
His reasons include the Feds being dovish, an increase in interest rates, and the growing lack of interest by central banks to bail out the struggling US economy.
5. The London Bullion Market Association- $1,658 ✔️
This group gained fame in 2018 when their prediction that gold would trade at $1,532 came true. Investors were amazed at how close to the actual figure their prediction was.
Now, this time, they had said that the price of gold would reach $1, 658. Again, they were proven right because, in February and March of 2020, their mark had been touched twice.
6. Jeffrey Gundlach - $1,700 ✔️
Jeffrey is the CEO of Double line Capital. He is also a popular gold bug in the international gold scene.
In mid-2019, he made the prediction that gold would trade at about $1,700 per ounce due to increasing negative-yield debt grips across the world.
His forecast has come true, but will the metal hold the level or are we going to remember it as the two spikes that we have already seen?
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We also have a keen interest in the price of gold in AUD and USD. Look at why we believe that the price of the metal will keep soaring.
● Gold vs US Dollar (XAUUSD) Forecast
Our technical analysis setup is telling us that XAUUSD is gearing for a further move to $1,760.60.
First, the Supertrend indicator is telling us that we have a strong uptrend in progress that has just completed making a higher “stair.” Once the stair (representing a higher high) formed, we had a minor correction to the $1,460 level.
Currently, we have the price bouncing off the 21 EMA, announcing a continuation to the historical level of 1760.60. Previously, when the price got into this level, it faced major rejections before consolidating and falling back.
Therefore, we predict that for the rest of 2020, the price of gold in USD will trade at 1760.60.
The only fundamental aspect that we think is significant at the moment is the Coronavirus (COVI-19) pandemic.
So far, it has contributed to the rally of gold. This is because the virus outbreak has frozen the world economy, leading to the weakening of major currencies.
Therefore, investors and economies are embracing buying more gold as a safe reserve. This is intended to continue until the pandemic is eliminated.
Besides, the current dollar rally is temporary. Other investors are turning to the dollar since it is one of the most stable currencies in the world. When the outbreak ends, the dollars will be sold back to the market, leading to oversupply, thus, loss of value.
In the end, gold will only get stronger.
● Gold vs Australian Dollar (XAUAUD) Forecast
The XAUUSD and XAUAUD charts appear almost identical, especially at the current level.
Well, the Supertrend indicator, which identifies the overall trend, shows that a new high is forming.
However, the most obvious signal is seen on the support level and 21 EMA. There is a long-tailed bullish candle that touched the EMA before shooting back up and closing.
We can explain that many investors were watching the support level. When the price reached it, they executed aggressive buy trades. The sharp rejection shows powerful bullish buying.
Unlike the dollar, though, the price of gold in AUD will not go very far since it has hit a resistance level that has a history of rejecting price. This coupled with the fact that a new high has just formed means that we are going to consolidate here for some time.
Therefore, we predict that for the rest of 2020, the price of gold will range around 2730.
Still, due to the Coronavirus pandemic, the AUD suffered its worst meltdown in over two decades. However, it is currently recovering and might not sink lower due to the intervention of the reserve bank.
Gold mining in the country has been affected since most of the mines and bullions have been shut down. This means that there is a slowdown in the production and sales (thus income) from the sale of the yellow metal.
In light of this, it is obvious that once production resumes, the price of gold in Australian dollars will experience a further boost.
Therefore, the price will rise and stick around the 2730 level.
Before making your decision to invest in gold, there are several factors that you should check. These are mainly the considerations that can help you in making predictions about the movement of the precious metal.
The following are some guides to help you.
1. Overall Trend (Market Sentiment)
In trading, the golden rule is to always adhere to the overall direction of the markets. Therefore, before deciding on whether to buy or sell gold, check the trend. For instance, if checking the gold price using AUD, make sure the trend is going up if you need to profit from buying gold in Australia.
Gold is correlated with some currencies such as the USD, ZAR, AUD and CAD as all of these countries trade in a lot of gold.
For instance, when the USD gains power, the price of gold goes down.
As such, check expected fundamental releases as they might affect the price that you get for your gold. If a currency is directly correlated with the metal, only wait for positive fundamental data before buying.
3. Investor Appetite
Gold investors, particularly in the futures and forwards markets have a significant effect on the movement of gold.
Forwards and futures traders have huge numbers, so when they place orders moving in the same direction; they can influence the direction of the gold market.
So, check to know whether the traders are majorly short or long lest you get stuck with stagnant gold. If you find that most futures and forwards contracts are short, avoid buying. Conversely, if they are long, you can join them in buying.
4. Technical Indicators
Tens of good technical indicators can advise an investor seeking to invest in this metal.
Indicators, when properly used, have great predictive power. If they indicate that it is time to go long on the commodity, do not be caught selling. If the indicator says that you sell, flow along with it.
However, do not follow indicators blindly.
Some good indicators to predict the prices of gold include:
○ Moving Averages
○ Supertrend Indicator
Over the years, it has been noted that no single factor affects gold significantly.
Rather, it is a combination of multiple factors.
Let us look at the most important factors that make the price of gold to go up or down:
1. The Dollar
The USD and gold are two bitter rivals that never walk the same path. When gold is up, the dollar goes down and vice-versa.
For instance, in 2019, as the dollar index closed with its smallest-ever annual move of +0.24%, gold was up by 18%.
The two are inversely correlated by two-thirds all the time. As such, when investors turn to gold, the dollar plunges. Similarly, when the dollar soars, gold weakens.
2. Central Banks
Most Central Banks in the world keep gold as a reserve asset. When they feel that they need to stock more, they buy more gold.
Since 2017, the buying trend of Central Banks shows a bullish trend.
Due to this, when a lot of gold has been bought from the markets, its demand goes up, leading to an increase in the prices.
3. Mine Supplies
As the mining industry goes, existing mines are running out of the metal.
This, in turn, forces dealers to explore new mining areas.
If exploration and digging costs increase, the price of gold goes up. Concisely, new mines are likely to produce costlier gold than old ones.
4. Inflation and Interest Rates
Gold, like all other commodities, is affected by inflation.
Therefore, when inflation increases, the prices of gold mining equipment, labor, and other related items go up.
This, in turn, leads to an increase in the price of gold that is mined during unfavorable economic times.
5. Increasing Gold Demand
Every day, and especially during catastrophes such as the COVID-19 outbreak, more people learn to preserve their wealth in stable assets.
One of these ways is to purchase gold and store it.
This occurrence has led to an increase in the demand for gold. As per the rule of demand and supply, when demand is high, the prices must increase.
The straight-forward answer to this question is NO.
There are two reasons for this:
One, we have no idea how long it will take before a vaccine or cure for the Coronavirus is found. Due to this, the markets will remain uncertain by forming spikes and unclear trends due to sudden events caused by the virus.
For instance, if the US agrees to pump billions into the economy to save the country from an impending recession, the USD will rally. This can lead to loss of gold price value.
Again, if more gold-producing countries experience shutdowns, the commodity will be rare, meaning it will be costly to buy it.
Second, as per the technical analysis, you might be late in buying gold right now. If you can consult the weekly charts that we posted earlier, you will find that, while we expect the metal to rise further, it might not go far.
This is because we have some resistance levels nearby.
If out of bad luck, you buy gold right now, you might have decided to buy at the top; which is very risky.
However, for CFD traders, they can wait for minor pullbacks and buy gold in the short-term. Also, they can watch the current levels of price and watch if sell setups might form soon so they can benefit from decreases in gold prices.
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Have you heard about CFD trading?
This is a form of online trading where you can potentially make money by buying and selling derivates (virtual instruments) related to gold.
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Gold price forecast and prediction is permissible and reliable like it happens with all other commodities and currencies. However, due to the many geopolitical and economic factors that are directly or inversely related to gold, it is hard to predict it with the utmost accuracy.
The price of gold is more volatile compared to other trading instruments. However, since it rarely loses value and always remains fashionable, it remains an attractive investment option.
Imagine if you had bought gold in 1990 when one ounce was worth $386. Today, you would be having at least $1,300 in profit per ounce!
Are you going to wait for more regrets in 30 years? Act now.
The content presented above, whether from a third party or not, is considered as general advice only. The information provided here does not consider one or more of the objectives, financial situation and needs of audiences. In addition to the disclaimer below, Mitrade does not represent that the information provided here is accurate, current or complete, and therefore should not be relied upon as such. This information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Mitrade is not a financial advisor and all services are provided on an execution only basis. We advise any readers of this content to seek their own advice.