- Summary:
- Philip Futures recommends buying every dip of gold price because of low interest rates and the rising number of coronavirus cases and Fed actions.
Gold price (XAUUSD) is up mildly today as traders waited for the upcoming building permits and housing starts data from the United States. The price is also still reacting to the positive retail sales yesterday. However, gold is still struggling to move past last week’s high of $1,818. It is now trading at $1,800 as Philip Futures recommends buying every dip.
Philip Futures recommend buying gold
Philip Futures is a large clearing members at the Singapore Exchange Derivatives Trading (SGX). The firm is a member of PhilipCapital Group, a large American financial company. In a note to investors, the company said that gold’s bull run would remain, boosted by the low interest environment. They therefore asked investors to always buy the dip. The note said:
“The bull’s case for gold remains intact with real rates low and suppressed and which would be able to sustain the high price of gold. But with prices at yearly highs, buying the dips probably works out best for most traders as a trading strategy.”
The statement came shortly after Fed’s John Williams warned that the US economy will take several years to go back to pre-crisis levels. Therefore, he emphasised that it was the wrong time to start thinking about raising interest rates.
The statement by Philips Futures came two days after a doomsday hedge fund that is up by 47% this year made a bullish bet that gold prices will reach $5,000 in the next decade. The fund argued that the unprecedented liquidity in the market today will lead to inflation. And most gold bugs believe that the metal is an excellent hedge against inflation.
However, it is worth noting that inflation has not been seen in the market yet. In fact, in Europe and the US, inflation is significantly below the 2% target.
Gold price technical analysis
The daily chart below shows that gold price has found some significant resistance at near the seven-year high. Also, the chart shows that the price has made an equidistance channel that is shown in green in the past few days. It is now at the lower side of this channel. It is also slightly above the 50-day and 100-day exponential moving averages.
Therefore, I expect the upward trend to continue as bulls attempt to break the previous support at $1,818. However, a break below $1750 will invalidate this trend. This price is along the 50-day EMA.
Gold Price forecast
