Investing in Gold and the Gold Price: Is Gold about to ‘Top Out’?

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Investing in Gold and the Gold Price

Dear Reader,

Gold-related investments have been on the move since November 2019.

For example, Gold priced in US dollars is up 9.85%. And gold in Aussie dollars is up 12.50%.

There’s been a rush to gold as the world flurries from potential global pandemic.

You may be wondering if now’s a good time to buy?

I don’t. I think golds topped, at least short-term. That means I expect the gold price to decline from here…

Before I get to that, let’s take a step back and understand what gold is.

What is Gold?

You know gold. Humans have lusted after it for centuries.

It’s a chemical element with the symbol AU. Which is why it’s usually listed as XAU on your broker platform.

Gold is often used in coinage and jewellery. This sector accounts for most gold demand today, especially in India and China.

In the past, gold was used in monetary policy. Reserve Banks had to hold gold against their currency issuance.

The world left the gold standard completely in 1971. Now, our monetary policy is run on what’s called a fiat currency system.

Investors still turn to gold in times of trouble.

This can be because of war and economic collapses.

Here’s how I view gold…

Don’t buy into gold with the expectation of turning a quick profit.

Gold’s usually a slow mover.

That’s why when gold forecasts come out, I always take them with a grain of salt. Take a recent article by FX Empire, for example.

The editor has said that he expects gold to be $US1,800 by March.

Here, see for yourself…

Expect increased volatility next week. If gold shoots past $1650, then there is a good chance we see $1780 – $1800 in March.

The problem with these kinds of forecasts is that they’re always one-sided.

As a technical analyst, investor or  trader…you need to always plan for multiple scenarios.

Before I get to that, I wanted to show you another forecast.

This time from Lukman Otunuga, as quoted recently on Kitko. He’s the senior research analyst from FXTM.

He sees US$1,600 as a price to watch.

So, what do I think?

Can the gold price rally from here?

Upfront, I think golds made a top.

Now, I’m not talking about the ‘top’…I still think in the long-term bias to gold is up.

But a short-term top in gold is why I wanted you to see this today.

Take a look at the chart below.

Gold Price - Investing in Gold

Source: Trading View
[Click to enlarge]

What you’re looking at above is the gold price US dollars. Its symbol is XAUUSD.

It’s a daily chart a goes back to February 2019.

I’ve highlighted a few points where gold made some important tops and bottoms.

What I found was that these occurred at the beginning of the month.

Generally between day one and four of the month.

What I’m trying to say is, if gold’s going to turn direction soon, it may do it now.

Let’s see what happens over the next two days…but buying at the start of the month may not be the best idea as a short-term play.

As always, this is not a recommendation to buy or sell XAUUSD. It is an update only. I hope you found it useful.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch

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