Gold eyes biggest quarterly price gain since 2016


  • Gold is on track to end the second quarter with a 12.4 gain. 
  • A double-digit quarterly gain was last seen in the first quarter of 2016. 
  • Aggressive easing by central banks seems to have boded well for gold. 

Gold looks set to end the second quarter with double-digit price gains. 

The yellow metal is currently trading at $1,770 per ounce, representing a 12.4% rally on a quarter-to-date basis. That is the biggest quarterly gain since the first three months of 2016 when prices rose by 16.11%. 

Gold loves liquidity

Gold, a precious metal with limited supply, seems to have benefitted from the massive liquidity infused by the US Federal Reserve and other major central banks over the past three months. 

The Fed's balance sheet has expanded by over $3 trillion since the beginning of the virus crisis in early March. Meanwhile, the combined balance sheet of G4 central banks has risen by $5 trillion during the same period. The central banks have been running accommodative monetary policies to help their respective economies absorb the shock arising from the coronavirus outbreak. 

In addition, intermittent episodes of US-China tensions likely played a role in pushing gold higher. 

The yellow metal looks set to extend gains over the coming months as the central banks are unlikely to unwind their ultra-accommodative policies anytime soon. Further, border standoff between India and China, heightened prospects of trade between the US and the European Union and the lingering US-China tensions would continue to draw haven bids for gold. 

Goldman Sachs expects gold to set a new record high of $2,000 in the medium-term. The investment bank, however, is of the opinion that further gains would remain elusive unless the US inflation rises above2% and is met with a muted monetary policy response. 

Technical levels

XAU/USD

Overview
Today last price 1771.12
Today Daily Change -1.44
Today Daily Change % -0.08
Today daily open 1772.56
 
Trends
Daily SMA20 1733.7
Daily SMA50 1723.64
Daily SMA100 1670
Daily SMA200 1588.06
 
Levels
Previous Daily High 1776.13
Previous Daily Low 1765.8
Previous Weekly High 1779.41
Previous Weekly Low 1742.97
Previous Monthly High 1765.38
Previous Monthly Low 1670.72
Daily Fibonacci 38.2% 1772.18
Daily Fibonacci 61.8% 1769.75
Daily Pivot Point S1 1766.86
Daily Pivot Point S2 1761.17
Daily Pivot Point S3 1756.53
Daily Pivot Point R1 1777.19
Daily Pivot Point R2 1781.83
Daily Pivot Point R3 1787.52

 

 

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