- Gold is well-positioned to further growth towards $2,000.
- The downside correction is likely to be short-lived.
Gold prices have been on a steady growth path for six trading days in a row and finished the week at $1,901, within a whisker of all-time high $1,921 reached in 2011. Considering the lingering concerns about the state of the global economy and flaring geopolitical conflict between the USA and China, there is little doubt, the prices will hit the all-time high within the next trading sessions.
The bigger and more important psychological target is $2,000. When will Gold hit this milestone and what might trigger the downside correction instead of the stellar growth?
Geopolitical tensions, stumbled economic recovery, and fears about the second wave of COVID-19 are the factors behind the recent growth of gold prices. Most likely, they will continue to dominate the market sentiments and support the rally.
Weakening the US dollar and the possibility that global central banks will continue pumping money into the financial systems to support the economies are also among the traditionally bullish factors fo Gold.
The Federal Reserve’s rate announcement on Wednesday is one of the most important events of the week that may influence Gold prices. It is widely anticipated that the central bank will keep the interest rate on hold; however dovish comments will lead to dollar sell-off and attract buyers to gold. In this case, XAU/USD may jump to $1,950 and higher.
As XAU/USD is moving towards an all-time high many traders get anxious and tend to lock profit on their long positions. Massive sell-orders clustered around that barrier may create a strong bearish bias and push the price below $1,900 to $1,1883 (the upper line of the daily Bollinger Band) before the growth is resumed. However, the daily RSI shows no signs of reversal. which means the bulls are still in full control, while the correction won’t be too deep.
XAU/USD daily chart