Technically, Gold is in an attractive maneuver mode right now, breaking the trading channel and moving the average moving averages upwards with extreme bullish sentiment.
For weeks and even months in Q2, gold has shown strong bullish performance. If we have a pullback or price reversal, we will see a cup/cup shape and handle from the 2011 high at 1,920 to 2,020. The cup and handle formation are even more bullish, especially in the long run.
Usually, a cup pattern takes 1 to 8 months to form, but this time it has been running for 9 years. While the formation for the handle requires less time, usually around 1 to 4 weeks, this time it could take more or less time. But clearly for the handle usually the price will be corrected to the inside of 1/3, 1/2 or 2/3 of the cup.
Gold has become part of a safe haven for the following fundamental reasons:
- The US economy has declined sharply, with a big showing on demand and home sales.
- The availability of jobs and retail sales really stalled, although the velocity of money decreased, but inflation still rose.
- Negative interest rates have placed a difficult dilemma on the bond market.
- While the distributors of large consumers, companies and national debt must now be paid.
The reasons above are not just a cause for investors to flee to gold, but the demand for silver investment has also exploded in recent months, skyrocketing higher than ever before. Massive capital inflows into silver show no signs of abating. A very bullish condition for silver, but most traders still don’t realize it.
Overall, since the start of the pandemic, Silver has jumped 72.67%, to breach 19.00 and trade as high as 19.44 in the middle of last week. Fridays close represented the highest close fro the Weekly chart since September 2016.
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Ady Phangestu
Market Analyst – HF Indonesia
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