Source: PaxForex Premium Analytics Portal, Fundamental Insight
Covid-19 continues to put pressure on the global health system, international trade, and the global economy as a whole. Many growth forecasts for 2021 are being revised lower, and GDP is not anticipated to make a full recovery to pre-pandemic levels until mid-2022. With the second wave of infection more violent than before, more negative revisions and economic disappointments over the winter months should be expected. Despite some encouraging progress during the third quarter globally, the threat of ongoing downward pressure with new restrictions remains elevated.
Poverty became a more significant threat than Covid-19 itself, and many governments with few exceptions added to an unsustainable mountain of debt, led by the US. Some emerging market currencies turned into more stable trades for Forex traders, and the uncertain outlook provides a significant safe-haven boost to gold, which currently remains the only real asset to protect portfolios. A new advance challenging its all-time high from earlier this year is on track as the year winds down.
The forecast for the XAU/USD maintains a bullish bias with price action on the verge of pushing into and above its narrow Ichimoku Kinko Hyo Cloud. The ascending Tenkan-sen support more upside and already pressure gold above its sideways trending Kijun-sen. The CCI entered extreme overbought territory but has more upside potential. A minor dip in price action will set this precious metal on course to test its horizontal resistance area. Can bulls deliver on the multitude of positive contributors to price action? 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 1,907.70 to 1,925.20 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,918.75
- Take Profit Zone: 2,035.00 – 2,075.00
- Stop Loss Level: 1,884.00
Should price action for XAU/USD breakdown below 1,907.70 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,884.00
- Take Profit Zone: 1,817.50 – 1,841.30
- Stop Loss Level: 1,907.70
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