Although the logic is perhaps misleadingly simple, gold continues to prove that it is exactly what people say it is: a safe haven in troubled markets. Currently trending under its 2011-12 all-time-high zone, gold retains the chance to break back into that zone in a more dramatic way – but has not done yet.
Starting on the daily chart, we see that gold is trending clearly within a parallel channel, which has been briefly breached recently both to the upside and downside.
We see a clear bearish divergence progression on the RSI, and if gold is to re-enter its all-time-high zone it will have to breach this trendline soon. The histogram here looks interesting, looking like it wants to continue expanding bullish.
On the 3-day chart, we see a stable regional market structure with an inflection level at about $1,675. This zone has been successfully tested in the last few days, and gold will continue looking bullish as long as this zone is held.
On the RSI, we again see a setup for a bearish divergence; but similarly, plenty of upside pressure on this trendline which makes a break from this trap look entirely possible.
Finally, moving back to the massively monthly chart, we see the full picture of gold. There is a basically unbroken uptrend obtaining since Sept ‘18, whose trajectory was already on track to punch clear through the red resistance zone.
Now, although the case for any asset is bleak in the short term deflationary macro environment that is upon the markets, the narrative of gold is perhaps never stronger than in times like these. This is because, massive government money injects have occured, and will continue to occur throughout 2020, posing the case of potential inflation following after.
This bullish case is tempered by the fact that macro inflation has been notoriously absent in recent years, despite an already generous monetary environment following the last economic crisis in 2007-8.
Still, gold seems to be serving its perennial role as safe haven pretty well.
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