Gold enjoyed a favorable few months around the start of 2019, and traders who followed the conclusions of our last FX News article on gold likely saw some very exciting profits. But now it’s Q2 and prices are plummeting. Are you one of the traders wondering just how low the price of gold will go?
Gold started its latest climb in November 2018. The rally proved to be epic and didn’t slow until the new year. Recent weeks saw contrasting highs and lows, but now a clear downtrend seems to be forming. If trend trading is one of your preferred trading strategies, then you might be tempted to place a ‘Sell’ order for the coming weeks. Before you do, take a step back.
For 20 years, gold danced at around 377 USD per ounce. Then, in 2002, a 10-year rally kicked off which skyrocketed gold prices to 1873 USD per ounce. Gold proved to be recession-proof in 2008, earning its title of ‘safe haven’ investment. Since 2012, gold has sat comfortably in a range of 1200 – 1400 USD/Oz. Such long periods of stability within a range are one of the reasons why traders like gold so much. Another reason gold is a popular trading instrument is that there’s an almost mechanical way in which gold prices move.
From a technical point of view, things don’t look good for gold. The majority of trading indicators suggest that gold prices will continue on the current downtrend, but we suggest you open your trading platform and see for yourself. Try doing your own technical analysis. When you’re done, compare your results with the figures below.
Current price: 1286 USD per ounce.
In all three forecasts, gold holds on to the current downtrend, making a ‘Sell’ order the obvious choice. But, how do these figures compare to yours?
Without a doubt, the majority of trading experts will say that the RSI indicator is the most reliable tool for forecasting gold prices. Try the RSI and other indicators to verify your results, but remember, previous price behavior is not a reliable indicator of future shifts. FX News suggests you also review the current news and economic releases. Find something that can support your conclusions. If you don’t find anything, perhaps consider the possibility that the coming price shifts might turn out to be very different from what we’ve seen so far this year.
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