Logo

Posts

Gold price forecast 26 Novemebr 2020

2020-11-26

2020-11-26

Gold faces bad times. Forecast as of 26.11.2020Dmitri Demidenko

Neither the dollar’s weakness nor the Treasury yield, which doesn’t grow, do not support the [XAUUSD][1] price. Let us analyze the gold outlook and a make up a trading plan.

Monthly gold fundamental forecast

Any trading asset gores up and down, the market is moving in cycles. The market cycle often depends on the economic cycle. The history proves that the best time to buy stocks is the recovery period following the economic downturn. This is the bad time for gold. Investors believe in the prosperous future, the risk appetite is increasing. Traders look for the assets other than gold to invest their money. Investors sell gold and buy other trading instruments, doesn’t matter if they are stocks, cryptocurrencies or commodities.

In 2020, gold has faced two worst daily sell-offs since 2013. The last gold crash resulted from the positive news about vaccines developed Pfizer and BioNTech. Markets believe in the victory over the pandemic; the stocks and Treasury yields surged, and the [XAUUSD][1] has dropped. However, the Treasury yields have dropped since then, and the US dollar is weak, which should be good news for gold. But this time, the market is different. Investors continue exiting ETFs, whose gold holding have contracted by more than 2% from the October highs. The holdings of the SPDR Gold Shares fund has declined to the lowest level since July.

Dynamics of SPDR Gold Shares holdings

Source : Financial Times

Traders do not want to sell off bonds amid the concerns about the Fed’s ‘operation twist’, which is to be launched in December. The greenback is falling amid the lower political uncertainty and higher demand for the risk assets. Why isn’t the gold price growing? Contrary to the historical pattern, the Treasury yield, the USD index and the gold price are following the same way.

There are several factors pressing down gold. Investors are willing to buy stocks, commodities and the [bitcoin][2]. Furthermore, investors fear that the gold trend will repeat the situation of 2011-2013. At that time, after the drop from the record highs, there were enough bull in the gold market predicting the uptrend recovery amid the central banks’ ultra-easy monetary policy and the US dollar weakness. The same situation is now. Goldman Sash believes that gold will hit a fresh all- time high in 2021 and will reach $2300 per ounce. ANZ sees the gold price at $2100 over the next twelve months. Commerzbank expects that Janet Yellen’s appointment as Treasury Secretary will further ease monetary policy by the Fed, which is good news for [XAUUSD][1] bulls.

Monthly gold trading plan

Gold bulls bet on the reflation environment. In 2011-2013, this plan didn’t work out. n this regard, Macquarie’s forecast of a fall in prices to $ 1550 an ounce in 2021, as the crisis has subsided, and expectations of the Fed monetary easing have lowered, looks much more reasonable. I don’t think the [XAUUSD][1] fall will be as sharp. However, over the three-year investment horizon, gold price can well hit the level of 1550 or so. It makes sense to hold down the shorts entered at the levels of [$1965][3] and also at [$1900, $1875 and $1865.][4] It is also relevant to enter new shorts on the drawdowns to $1825 and $1845. The medium-term targets are at $1775 and $1725.

Price chart of XAUUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Rate this article:

{{value}}

( {{count}} {{title}} )

  1. my.liteforex.com/trading/chart?symbol=XAUUSD&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=BTCUSD&returnUrl=true
  3. www.liteforex.com/blog/analysts-opinions/gold-bulls-will-step-back-forecast-as-of-05112020/
  4. www.liteforex.com/blog/analysts-opinions/gold-pays-the-debts-back-10112020/