XAU/USD market mood: Gold has reasons for strength in the medium term [Video]
|Listen to the latest market mood for the XAUUSD.
Gold has reasons for strength in the medium term.
The record low-interest rates around the world mean that cash investors have little incentive to keep assets in cash. Secondly, the huge amounts of quantitative easing from the central bank around the world mean that cash is literally devalued. This increases the appeal of gold. Thirdly, the fact that real yields are negative on US 10 year bonds means that if investors parked their money in a 10-year bond it would, when inflation is taken into account, actually mean that yields on the bond would be negative.
XAU/USD has now formed a triple bottom on the 1-hour chart and a break higher would make sense technically here.
Therefore, expect XAUUSD buyers from the market.
Trade Risks: Heavy equity selling will invalidate this outlook as gold has been falling recently when the equity markets fall.
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