But... the dollar will have to catch its breath at some point. As for interest rates at 2.5% with inflation at 9%, that won't be enough to curb it.
But if the yellow metal isn't going up, it isn't going down either.
It is quietly resting in a sideways drift before continuing. It may correct further, but the probability is low and the support is holding.
Gold in Euros (daily)
On the daily chart of gold in euros, support at 1700 euros has broken, but the longer-term support around 1650 euros has held. Gold came to test it on the 21st July 2022 and immediately rebounded by 6.5%.
Let's zoom out a bit to see if a trend is emerging.
Gold in Euros (weekly)
We see a convergence of supports that make this area of 1700-1650 euros an important support in weekly: lower Bollinger band, horizontal line and oblique line.
We can also see here the test of gold which broke through low enough to draw a "doji" the week of July 18, but bounced right back.
The Bollinger Bands are moving to the horizontal and the yellow metal is testing the resistance of the average Bollinger Band.
For the moment, continued sideways consolidation that prepares for a bullish recovery.
Gold in euros (monthly)
The month of July ended with a gain of +0.17%, a "doji", a candle where the close is very close to the opening.
On a monthly basis, we see an intact bull market.
The pivot at 1650 euros (blue line) was tested in July.
The yellow metal continues to consolidate, indicating a bullish probability. It is just taking its time.
Gold in dollars (monthly)
On the price in USD, we can see the rebound on the support around $1680. This level also corresponds to the lower Bollinger Band.
Moreover, we see that the Bollinger Bands are tightening and crossing well into the horizontal, a clean signal of consolidation before the trend continues.
So, all is well for gold and the tensions between China and Taiwan could be good for it.
Now... If you own gold and are scanning the price, worried that it won't go up, you need to be patient.
Gold is about buying and waiting calmly.
Gold is not for the impatient. The gold cycle is long term.
The easiest way to do this is to look only at the time unit of the cycle concerned. You can have fun zooming in weekly or daily if you're looking to optimize your entry point, but in the end, you often just get tired and stressed.
You can also buy monthly to smooth out your costs.
Gold doesn't react on a moment's notice. These correlations are not 100% immediate and systematic. It is better not to worry about market noise. The trend is clear. Gold is a must in your portfolio. Simply because there is nothing else less risky.
It is a logical and simple deduction.
Institutional investors are not mistaken. Despite ETF outflows in recent months, 2022 inflows have nearly offset 2021 outflows, underscoring the continued strategic demand for gold. Total holdings at the end of July stood at 3,708 tonnes (US$209 billion), up 5% on the year.
At the end of July, the World Gold Council reported that central banks bought 59 tons of gold in June. The WGC noted that central banks bought 270 tons of gold in the first half of the year and 180 tons in the second quarter.
"This is a continuation of the strong buying we saw last year and we now expect central bank demand for 2022 to equal 2021 levels," the WGC said in a recent commentary.
And yet, we see a minority of individuals deciding to take action. Perhaps they will be inspired to invest in physical gold when it hits the headlines? As in the stock market, buy at the sound of the gun and sell at the sound of the bugle.
This is a very well known psychological principle: FOMO (Fear Of Missing Out)
It means the fear of missing an opportunity.
What about you? Are you ready to act before the masses and profit from it?
The GFI team
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