Forex Gold Price – To explain what happened to the price of gold in 2021, it is good to think about how the price of gold will be at the end of 2020. The decline of the USD with the beginning of the pandemic, increased central bank easing measures and lower US interest rates.
Gold prices then fell for seven months until they reached $1,677, down 19.1% at the beginning of March 2021. As the global economy and stock markets began to pick up, fears of permanent shutdowns, global economic collapse, and failing stock markets began to recede. Then, the price of gold started to rise. Declining global jewelery demand and a drop in global gold consumption led by central bank gold reserves have further contributed to the seven-month slide in gold prices (see chart).
Forex Gold Price
Technically, the decline in gold prices from the historical peak in August 2020 and most of the 2021 trade can be seen as a long-term price consolidation pattern. historical gold reached August 2020. $2,073 (see chart).
Gold Price Forecast With The Us Nfp Data In Focus
During 2021, consumption of gold jewelry began to recover and central banks began to increase gold holdings (see chart above). Although the volume of gold consumed by two of these traditional gold buyers in the years prior to the peak has not yet recovered from the August 2020 gold consumption quarter. gold price in August 2020. In addition to the consumption of gold in 2021, two other important factors have affected the price of gold.
First, the rise in US inflation caused a significant decline in real (inflation-adjusted) ten-year US debt. Historically, declining real returns have supported gold prices.
Second, after hitting near three-year lows in early January 2021, the US dollar (USD) began to rise steadily throughout 2021. helped boost the US dollar. The feeling that the US economy does not need more stimulus and that the Fed’s next move on interest rates is likely to be an interest rate hike has caused the USD to strengthen significantly throughout 2021.
As part of the tightening of monetary policy, the Fed began reducing its asset purchases by 15 billion US dollars per month in November 2021, and then doubled the interest rate. down to $30 billion a month in mid-December. Historically, the price of gold has had an inverse relationship with the USD. As the dollar began to rise strongly in mid-2021, gold prices began to decline and on August 9, gold prices fell to test the 2021 gold price low. While real output fell further, driven by rising US inflation, the recent strengthening of the US dollar in the second half of August allowed gold prices to recover.
Famous Pattern Put Gold Traders Ahead Of The Curve
The real return of the USD and the US was driven by the strengthening and weakening of the US economy. Recently, the monetary and fiscal stimulus measures implemented earlier began to be ineffective. The government began to adjust in line with economic data and the threat of restrictions after several increases in Covid cases. The increase and decrease in nominal US ten-year yields in the second half of 2021 had a significant impact on real bond yields, the USD and therefore the price of gold.
Looking ahead to 2022, it is almost certain that the Fed will raise interest rates at some point. Interest rate markets are set to begin in early to mid-2022 for the Fed’s first rate hike. Historically, the USD has lost ground when the Fed raises interest rates. If the USD loses ground, it should support the price of gold. However, raising official interest rates will slow inflation and put downward pressure on the US economy and US ten-year yields. If inflation falls faster than nominal output, US real output will rise and gold prices will be under downward pressure. In short, the price of gold beyond 2022 may be the same as the price of gold in the second half of 2021.
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How To Trade Gold In 4 Steps
Gold prices are up more than 7.3% since the end of November, with the rally taking XAU/USD back to 2019 highs. the broad view, the spike may be vulnerable as the price approaches the technical level close to the resistance of the trend at the beginning of the month. These are the updated targets and breaking levels that are important on the weekly XAU/USD chart.
Note: In last month’s weekly Gold price, we noted that the recent sell-off placed XAU/USD in an important support zone, “an area defined at the end of November and 100% extension of 1451/56 -“. 2015 advance.” Gold held this key barrier until the end of the year, and the next breakout is now extending to the 2019 high.
The immediate focus is on 1555, which is supported by the upper parallel of the upward pitchfork formation that follows the 2016/2018 low (currently ~1566). A break/close high is needed to justify a longer bias targeting the 61.8% retracement of the 2011 dip at 1586 and 1625. The first support is at the 75% parallel (~1500), supported by a prominent cross. near 1480. The key support / lack of a broad decline held constant at 1451/56 at the beginning of the year.
Conclusion: The rising gold price is approaching strong resistance in the target. From a trading perspective, look at reducing the long exposure/increasing the protective stop of the rally to the upper parallel – expect a bigger reaction there.
Weekly Gold Price Forecast: Channel Provides Guide For Longs & Shorts
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