Gold price (XAGUSD) is down slightly today as traders wait for a statement from Jerome Powell. The yellow metal is trading at $1,911, which is slightly below this week’s high of $1,918. Other metals are also in the red, with silver and copper falling by 0.55% and 0.05%, respectively.
The price of gold has been in an upward trend in the past few days. In this period, it has moved from a low of $1,848 to yesterday’s high of $1,918. These prices are below this year’s high of $2,075 that was reached in early August.
The sluggish performance of gold can be explained by the overall performance of the dollar. In September, the price declined mostly because of the stronger US dollar. Indeed, the US dollar gained more than 2% in September, which was its best month since March. Therefore, since gold is viewed as a safe-haven commodity, its price tends to fall when the dollar rises.
Indeed, this trend is visible this month. The gold price has risen slightly while the US dollar index has been in a freefall. As of this writing, the index is trading at $93.48, which is its lowest level since September 21.
Still, some analysts remain optimistic about the price of gold. In an interview earlier today, Wayne Gordon, an analyst at UBS said that he expects that the price will rise to $2,000 by mid-2021. He cited the role of gold as a diversifier for global investors as real yields remain in the negative. You can watch the interview here.
The statement came a few weeks after another UBS analyst recommended investing in gold as a hedge against the upcoming general election in the US. He said:
“in [the] event of uncertainty over the US election and the Covid-19 pandemic, gold is a very, very good hedge.”
Gold price technical outlook
The daily chart shows that gold price has been rising in the past few days. In this time, it has moved from a low of $1,847 to $1,911. The current price is along the middle line of the Donchian channels. It is also slightly below the descending trendline that is shown in green. This trendline connects the highest levels in August and September.
Therefore, in the near term, I suspect that the price will cross the Donchian channel and move to the descending trendline. On the flip side, a move back to the support at $1,847 will invalidate this trend.
Dow Jones Daily Chart