Gold Bounces Off Support, As Free Cash Flows Into Markets
GOLD has been on a bullish run for more than a year. last year, the bullish momentum was attributed to the trade war between US and China, which weakened the global economy and in particular manufacturing. Then came coronavirus by the middle of January, and the world economy started going downhill.
As a result, Gold surged around $250 higher to $1,700 in the first two months of this year. But, it turned bearish this month, as coronavirus spread across the globe. It didn’t make much sense as a safe haven, but markets leaned on the USD as a global reserve currency.
Gold turned quite bearish, as did almost all assets against the USD, which rallied higher. But, the decline stopped right above the $1,450 area, which has provided support before for Gold. In the last two trading days,. Gold has bounced off that area and has climbed above the 100 SMA (green) as well now on the daily chart. But, the price has slipped a little lower and is trading around this moving average now.
Central banks and governments are pouring cash on the markets, so Gold is benefiting from it. With this much cash, there might be an inflation problem coming up soon, when the virus is brought under control. So, I assume Gold will remain bullish for quite some time.
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