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Gold Price Forecast: All-Time High Within Range

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Forex Attack Teamhttps://forexattack.com
The Forex Attack Team researches and publishes thought-provoking news, analysis, and opinion pieces on the global financial markets. We provide in-depth coverage of forex, commodities, and indices.

Gold prices, alongside other precious metals like silver and platinum, are in the midst of their best week since March 23. That was the week that the Federal Reserve announced its extraordinary monetary intervention into financial markets in order to stave off a cataclysmic collapse stemming from the coronavirus pandemic. Gold prices are up over +4% on the week, and within 2% of the all-time high price of 1920.94 set back in 2011.

Gold Prices July 23, 2020

Several points of confluence are working to push gold prices upward. The recent €750 billion bailout package passed by the European Union helped to strengthen the euro against the US dollar. As coronavirus cases in the United States have dramatically spiked the US dollar has lost much of its safe haven appeal. COVID-19 cases have increased by more than a million in just 15 days. By comparison, cases throughout the most of the developed world have continued to flatten or fall.

In recent weeks the dollar index (DXY) has been softening significantly. If we overlay the DXY on the gold price chart, we can see moves between the two tend to be inversely correlated. When Gold hit the all-time high in 2011 the dollar index dropped under 73.00. We’re already seeing similar patterns in the charts. With the DXY pointing downward, there is a possibility that Gold breaches the 2011 level. Beyond that it will likely attack the 2,000 area.

Gold to DXY

Senate Majority Leader Mitch McConnell said on Tuesday that the GOP supported another round of stimulus checks “to help American families keep driving our national comeback.” This may provide some near term economic support. However we anticipate that increasing coronavirus cases in the United States will cause more job losses and will push the US economy further into recession. We also anticipate that the recovery will be L shaped. Further weakening the dollar and pushing Gold prices upward into the second half of the year.

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