Gold hits new highs in Euro
Gold returned to growth after nearly three weeks of decline, reversing last week's drop. The desire for a safe haven for global capital is so strong that it far outweighs the effect of a stronger dollar. The growing tension around the Russia-Ukraine conflict has brought gold back into the focus of investors due to pressure in equity markets.
Since the beginning of the week, the price has gained 5.3%, returning above $2,700. Technically, the price found buyers again shortly after falling below the 50-day moving average, which acts as a significant indicator of the medium-term trend. The ability to rise further would be an important price signal.
A quick reversal from down to up makes the scenario workable. The decline in early November is a technical correction from October 2023's rally, which ended with a decline to 76.4% of the total gain. Such shallow corrections are characteristic of strong markets. If gold manages to rewrite the highs soon, the long-term target will be the $3,400 per troy ounce area.
The weakness of the single currency, caused both by geopolitics and the sharp cooling of the economy and political crisis in Germany, is also a serious reason to move into gold.
The chart of the gold price in euro paints an even more technically beautiful picture. On Friday, gold surpassed the €2,600 per ounce mark, hitting an all-time high, adding every day this week. The turning point that attracted buyers was the touching of the 50-day moving average towards the end of last week. For more than a year, this curve has provided tactical support: localised selloffs stop there.
The drawdown at the beginning of the month also fits into a classic Fibonacci retracement, with a pullback to 61.8% of the rise from the August lows to the late October highs. Movement within this pattern suggests the next shakeout near €2,840, which could well be a bullish target. At the current exchange rate, this roughly puts the price at $3,000. Given the decline of the single currency, these could be lower levels as well.
Author
Alexander Kuptsikevich, a senior market analyst at FxPro, has been with the company since its foundation. From time to time, he gives commentaries on radio and television. He publishes in major economic and socio-political media.
