To estimate the potential of gold in the coming years, we need to understand the direction in which XAU/USD will move once the triangle is completed. Analysis of the price history of several instruments under similar conditions points to a more likely bullish breakout. Once the upper edge of the triangle is broken, the target price will be located on the boundaries of the second global area, between 1950 and 2000 USD. Then, a small pullback may occur, but if the buyer is strong enough, the price may exceed the boundaries between areas 1 and 2, reach the previous all-time high of 2074 USD, and even update it.
The next target will then be the level of 2,350 US dollars. The price of gold initially rebounded as the war in Ukraine unfolded, and investors sought high-quality liquid hedges amid growing geopolitical uncertainty. Coronavirus aid packages and periods of economic recovery caused a decline in the price of gold, while rising inflation, the spread of the pandemic and geopolitical tensions made investments in gold much more attractive. Most novice gold investors believe that if inflation increases in the U.S.
In the US, the price of gold should also rise, as more dollars of inflation will have to be paid per ounce. Since gold is also considered a very effective portfolio diversifier due to its low and negative correlation with major asset classes, it tends to rebound in times of uncertainty, so one of the factors to consider is the relationship between gold and other asset classes that feel pressure or pleasure in current financial circumstances. With this in mind, let's detail recent technical developments, fundamental factors and commodity analysts' gold price predictions. Uncertainty about the end of the economic recession and higher inflation rates may push gold prices up.
When U.S. government bond yields rise, gold is very likely to trend sideways or even downward, while falling yields tend to cause very positive movements in gold prices. Gold is not only known for being a factor that diversifies portfolios, but because inflation fears are increasing, investors tend to buy gold because of concerns that inflation will dilute the purchasing power of fiat currencies. Of course, gold is also consumed as jewelry, and there are large increases in demand even by world governments that seek gold as a store of value that they hold in central banks.
Investing in gold has never had a better time to start than right now, the price is about to skyrocket, but participating in the trading of such a product can be difficult due to its physical nature and the exclusivity of many gold brokers, who are not as open to new traders. This was known as the gold standard, but in 1971, the President of the United States, Richard Nixon, asked the Federal Reserve to stop respecting the value of the dollar in gold and to end its primary use as a monetary value and helped the asset become more of a store of value. As a result, this factor is not likely to exert substantial pressure on gold prices compared to current levels. Demand for gold continues to change and, in recent times, has increased as manufacturers of electronic products have seen the use of gold in their products to increase conductivity.
The policy of quantitative easing is in full swing in some of the largest economies in the world, and this is good news for gold, since savings are ignored when it comes to the dollar and a new means of saving, such as gold, is needed. Unlike almost any other asset, gold is usually neither a security asset nor a risk asset, although popular financial media have often referred to it both ways over the years (depending on how gold behaves in recent months). .