Gold has formed a golden cross amid rising US infections due to a new Covid-19 strain called Delta, which threatens economic growth and heightens uncertainty over the next hike in interest rates.
This means that the 50-day moving average crossed the 200-day from the bottom up.
In the past, this pattern has served as a bullish indicator for the price of gold.
Gold was still trading about 12% below its all-time high set last summer, Holmes said.
In the short to medium term, gold demand appears to be driven by central bank policy, which will remain flexible even as inflation concerns intensify.
According to CME Group’s FedWatch Tool, there is a 75% chance that interest rates will remain in the 0.00% to 0.25% range for another year.
This means gold will have ample time to test the $ 2,000 / oz mark or higher.
Gold is a great way to diversify your portfolio. Low bond yields pushed investors towards riskier assets, including stocks.
It is a winning strategy as major indices are hitting record highs, but it is important to maintain positions in precious metals to manage risk. It is recommended to allocate 10% of capital for investments in gold: 5% for physical gold and 5% for gold stocks.
Last week, gold closed at $ 1.808.32, recording a gain of $ 21.02, or 1.18%. According to the NYSE Arca Gold Miners Index, gold stocks ended the week with a 0.12% fall.
Central banks in many countries – from Serbia to Thailand – are replenishing gold reserves, writes Bloomberg, and Ghana recently shared plans to buy, as fears about accelerating inflation are mounting. The revival of global trade allows countries to increase their purchasing rate.
A recovery in purchases, which fell to their lowest in 10 years, will improve the outlook for gold, while several other sources of demand have weakened, Bloomberg reported.
The worst performance for the week was shown by silver, which fell 1.39% after two weeks of growth. Bank of America lowered its 2021 silver price forecast by 3.9% to $ 27.71 an ounce. Regardless, silver will do well due to the growing demand for solar panels and electrical devices.
Major market indices ended the week with mixed results. The Dow Jones Industrial Average rose 0.24%, while the S&P 500 rose 0.43%. Meanwhile, the Nasdaq Composite climbed 0.43% and the Russell 2000 small-cap index lost 1.13%.
The S&P / TSX Venture Index fell 3.09%. The yield on the 10-year Treasury bond fell six basis points to 1.36%.