Gold Price Analysis September 2020 | Can it Break & Stay Above $2,000?

by birtanpublished on October 2, 2020

The price of gold hit all-time highs uh in august then we saw a fairly sharp reversal uh around about what two hundred dollars ten percent move back off of those highs it stabilized since then so just where is the opportunity in gold is the top already in we've seen a major top or actually this weakness is just a pullback before the next all-time high is set i thought it'd be interesting to do an update on gold um clearly after the volatility we saw in august punched out to all-time highs up um

Around about 2075 dollars an ounce uh on around the sixth of august and then uh well less than a week later it reversed and dropped a couple of hundred dollars so we've seen something of karma trading since then but i'm wondering where the opportunity is next if we take things out clearly that trend that we've been watching since um the august 2018 lows is still in effect but has the price gone too far is the right position now to be short gold or actually buying into weakness if we have a look at the trades we've got open

We have a couple of um gold trades on we've got the pure gold trade here i suppose we call it buying at 1934 and that's that's slightly ahead and we've also got um just down here from when we were looking at etfs uh of van gta's uh gold miners etf running and that's up about 90 pounds so um smaller exposure we did close out um the most of our trades on the reversal off those all-time highs so the gold trades got closed out uh the 7th of august and i think it was um around about 2020

From memory i think is where i put that the take profit order so we came out of a lot of those positions but i'm quite keen um to get a new trade on for september so i'll talk a bit more about what's been driving gold then we'll come back look at things in more detail and see if we can set a trade up hello i'm david jones from capital.com and i thought we'd do an update on the price of gold clearly we saw fresh all-time highs during august the volatility has backed off a bit since

Then but i still think there are opportunities in this market over the next few weeks so in this video what we'll do i'll talk a bit about what's driving it what to watch out for uh in the weeks and the months ahead then we'll jump onto the platform um look at where we are at the moment see where the opportunity is is there another trade to do to add to the trade that we already have as usual if you're watching this and you haven't subscribed if you could

Subscribe it helps us grow the channel and it means we can continue pushing out lots of fresh content like this in the weeks ahead plus um this friday is non-farm payrolls day the us unemployment announcement and we're doing um a live broadcast over that so i'll be doing that looking at how the markets react to this very important announcement but let's get into it let's talk about gold so as i said we saw the price of gold hit all-time highs in august trading up

To about 2075 uh dollars announced there's a few things that's been driving gold as we've been discussing over over recent months we've had a weaker dollar plus of course we've had ongoing investors fears uh about the coronavirus pandemic and what impact will it have on the economy are people maybe underestimating the impact so gold has played its its part as a safe haven and uh something to benefit from a weaker us dollar there's been lots of uh investor

Interest in gold private investors institutional investors in the second quarter of 2020 there was a record influx of money into gold backed exchange traded funds so a way of getting exposure uh to gold so that was our record in the second in the second quarter of 2020 and again you know clearly with the price moving higher making plenty of headlines pulling plenty of people in so i do think as i talked before there was an element of a fear of missing out

The old fomo effect um we talked about it i think at the beginning of august middle of august and i said well maybe things are getting a bit overheated we did move the stops up on the existing trades got taken out of those for a profit and we did see quite a sharp reversal off those all-time highs but i think things have calmed down now we're back to a more normal market for gold i think what could also help it last week we heard that the u.s central bank

The federal reserve said that it was sort of comfortable with letting inflation go moderately above its two percent target so um plenty of people saw that as a sign that the fed was restating its view it was happy to keep interest rates uh low at pretty much near zero levels and plus of course this means could mean a weaker us dollar so we did see a bit of a spike for gold on that news but i do think the threat going forward

For the gold price is a us dollar recovery i talked about it last time around about the potential for the us dollar making a base i think the market to watch here we'll have a quick look on the charts is the us dollar index watch how this performs over the next week couple of weeks because i think if we see this perhaps start to consolidate around current levels we could see the dollar get lifted in the weeks ahead that could put some

Pressure on the gold price but for now i'm all still positive let's take a look at the levels to watch the most immediate um resistance on the upside just above 2 000 coming in at dollars announced and on the downside uh recent support down at 1900 so we've got a reasonably tight band i suppose but to put some color on these numbers let's jump on the chart and take a look at things in more detail before we start looking at gold here's the us dollar i think it's really important to watch this um if you're

Looking at all sorts of markets this is the the us dollar index so on our platform the code is uh dxy it's the same code on many other uh chart platforms as well but this is why i think it's interesting we've seen plenty of dollar volatility this year dollar strength as the coronavirus really spread uh and panic picked up in march and since then since those march highs of 104. we've seen the price back off by what 10 11 since then but it's what's been going on

Over the last sort of few weeks that i wonder about um so it is still weak the trend is still down for the us dollar but we're not seeing um anywhere near the same sort of downward momentum that we that we saw through sort of may june and july so i do wonder down at these levels down at 92 will we see the us dollar builder base if we do and you see it starts to rally that could put some pressure on gold but let's take a look at gold so i'll do our traditional start the two year plus uh chart of gold we had this trend

That we've been watching all the way through these gold videos from 2018 uh the lows in august 2018. the price has clearly trended up this trend line's done a great job it's accelerated from march uh onwards and we are where we are now the trend line is coming in below fifteen hundred dollars at the moment so even if the price of gold fell four hundred dollars from here twenty percent we're still within that two-year trend so for me that does set the tone for the trade i want to do um i probably want to be a buyer whether i

Buy now or buying a bit of weakness that's the question but i don't really want to be going short gold up here what i want to do though is focus on what's been going on since march so we've got another great almost textbook trend that's been happening uh since march in gold and this has also done a good job of holding the price up at the moment the trend line is coming in around 1900 dollars an hour and you can see there's a good band of support i think for shorter to medium term trades running from around 1860

Through to 1900 so for me if i'm thinking about trading it buying in here um that's a zone i want to focus on for when it comes to setting stop losses if we take a look at the rsi uh down here clearly went massively overbought on the way up but the price carried on rising uh given the correction that we've had we have seen the rsi cool down a bit and it's currently trading around 50 on the rsi but what i want to do really is focus on what the price is doing so for me

This trend is still up so my target initial target is a run back to those highs uh around about 2075. if we can break those highs 2100 will be the next shorter term target after that so i would like to be a buyer but let's just flip this over to an hourly chart and look at the volatility in a bit more detail so we've got here pretty much most of the month of august so the highs the all-time highs the 6th of august then the sell-off you can see this spike here the other week

Last week i should say when we had that fed statement the jackson hole statement from last week about inflation i'm happy to let inflation go moderately above its target but if we look at gold we've had for the last few weeks fairly sideways trading range uh for the price of gold uh pushing up 2020 2015 that sort of area has been a bit of a barrier and on the downside lots of support from uh 1860

Through to 1900. so what i'm gonna do i'm gonna place an order so i think we could see continued chop in the short term but it doesn't change that that big term that big view uh the two-year trend is still up so what i'm going to do is put an order to buy if the market drops back to 1920. so if we drop back to only where we were um sort of last week or so so i want to put an order in to buy at 1920. the tightest i'd want my stop the other side of 1900

But i don't want to put a stop there it's too tight i want to put my stop somewhere the other side of 1860 so i might go i might give it quite a bit of room actually if i think we are going to see the next big swing up in gold at some point over the next few weeks couple of months i want to stay in the trade so i'm going to buy at 1920 and i'm going to put a stop down at 18 20. so i'm going to give it a 100 worth of volatility tighter stops for me would be probably

Down at 18 1850 but let's let's set that trade up so i'm ready to go i want to buy 3.3 ounces if the price gets to 1920 if 1920 gets hit put a stop loss at 18 20. so 100 away and my risk i've upped my risk um you may remember we always use a two percent risk on this account so typically it's been a couple of hundred pounds because we started off the account with ten thousand pounds uh i think it was the summer of 2019.

At the moment the account is uh 16 400 but that's including 3 000 pounds of open profit so i'm saying i've got 13 000 in my account i only want to risk losing 2 of that on any one trade so um 250 pounds is where i've rounded it up to so that's the reason why my risk has increased slightly on this the account's grown so we bump up uh the level of risk and if it continues hopefully to head in the right direction we'll continue to add in more risk but that's it let's uh let's place the order that's it our limit order is placed by

3.3 at 1920. and i do think that 1850 1860 level is pretty critical i think if we see that loss there is a risk we're going to go back to the low 1800s so for now for this trend from march i'm looking for that to hold looking for a bit of strength to come in um over the next few weeks and i push up to 2075 and perhaps even a little bit further we'll see how that trade works out that's it for the update we'll see how the next couple of weeks uh fair don't forget that

Live session this friday over the long final payrolls but from me david jones and capital.com we'll leave things there good luck with your trading for more trading videos just like this please subscribe to our channel

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