Source: PaxForex Premium Analytics Portal, Fundamental Insight
The US only vaccinated 1,000,000 in December, well short of its goal of 20,000,000. Healthcare officials warn of another spike in infection over the next few weeks due to the holiday seasons and general disregard for social distancing and face masks. Economic data around the world confirms a slowing economy, and trillions of dollars worth of stimulus are depleted. Governments added to an unsustainable debt load and miscalculated the resilience of the Covid-19 pandemic.
With the global economy under pressure, governments can either add more debt and deduct from future growth potential or stand by and witness a double-dip recession. Either scenario is net-negative, but a double-dip recession now would allow more robust growth ahead. The present model will keep economic potential depressed for an extended period, making safe-haven assets like gold and silver popular among all investors. Central banks have been buying gold for years amid fears of an inflation spike and below-average GDP growth.
The forecast for the XAU/USD remains bullish following the recovery from its previous sell-off above its Kijun-sen and Tenkan-sen. While both entered a sideways trend, suggesting exhaustion, expanding risk aversion can catapult gold through its Ichimoku Kinko Hyo Cloud, which shows signs of trending higher. The CCI moved out of extreme overbought conditions and has plenty of upside potential. Will bulls rally and pressure the XAU/USD into its next horizontal resistance area just below the psychological 2,000 level? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for XAU/USD remain inside the or breakout above the 1,863.00 to 1,889.45 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,876.00
- Take Profit Zone: 1,952.60 – 1,973.50
- Stop Loss Level: 1,855.00
Should price action for XAU/USD breakdown below 1,863.00 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,855.00
- Take Profit Zone: 1,807.40 – 1,819.60
- Stop Loss Level: 1,863.00
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