Wednesday , 15 May 2024
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Global Economy

How high can gold go?

Let’s remember…

After crossing the $1700 level on April 13 for the first time, a little over 3 months later, on July 20, the daily high level of 1820.58 dollars an ounce was supported at $1670 below, while it was above the $1740 resistance. made experiments. Ultimately, it broke this resistance and passed the next step, the psychological resistance level of $1800, and it entered a process where it constantly broke records by capturing a very rapid increase momentum that started after July 20 and continued until today. As a result, we were also talking about this serial gradual increase acceleration from July 20 until today in our daily comments, but the fact that ounce gold prices reached today’s levels was not a surprise and beyond expected development.

What kind of process awaits us after this?

To find the answer to the question, first of all, let’s see what were the conditions that brought the ounce of gold here, and whether these conditions still apply. After the Covid-19 epidemic, the global Central Banks injecting abundant liquidity into the markets as a result of their expansionary monetary policies, the decline in global interest rates to zero or even below zero, the US 2-year and 10-year bond yields at historically low levels, the American dollar index is the highest since 2018. Demand for gold gradually increased and we have come to today’s situation when factors such as the decrease in the market to low levels and the situation arising from the uncertain and unpredictable environment for the upcoming period led investors from risky assets to less risky assets. The situation, which consists of the factors we have mentioned, is still valid as of the moment we write these lines. And when we follow straight logic, we reach the answer to the question that the main upward trend of ounce gold still continues in the process that awaits us from now on. Central Banks of developed countries, in particular, reiterate that they will continue their low interest policy, which is an extension of expansionary policies, as long as the Covid-19 epidemic does not completely stop, while state administrations say that they will support the monetary policies of central banks with their public fiscal policies. When we add the political and geopolitical tensions to these, we can say that the waters will not calm down until the end of the year.

When we say that the main uptrend will continue, are we talking about the continuous rise in gold prices?
Let’s ask it even simpler…

Is it still possible to buy gold at this level? (Will new records come under it?)

While answering this question, of course, we need to talk about gram gold prices in addition to ounce gold pricing. Gram gold increased by 65.5 percent on an annual basis, almost twice the increase of 35 percent in ounce gold. We think that gram gold has entered a trend that will not return until the end of the year, almost to the level of 465 TL. In addition to the scenario where the main upward trend in ounce gold prices will continue, we see a strong possibility that gram gold will surpass 550 TL when we come to the end of the year, especially after the sudden rise of the dollar/TL rate. While moving towards here, it does not seem far away that it continues its movement in the band range of 479-486 TL for a while and catching an exit towards 500 TL after ounce of gold regains momentum.

In the meantime, while talking about the continuation of the main uptrend under ounce, it should be kept in mind that there will be occasional pullbacks in this trend. Of course, if we make a projection until the end of the year, we can say that the rate of return for investors who have never bought gold before has narrowed compared to the previous periods of the year. If the ounce gold prices, which have increased by 35 percent since the beginning of the year, reach $2500 at the end of the year, they will have increased by about 20 percent from now until the end of the year. Considering that the $2500 levels for the end of the year are spoken as a target, we can say that there is still room to take a step for gold investment.

What price levels should we follow?

In the last current situation, an ounce of gold saw above the $ 2070 level in intraday transactions and then regressed to the levels of $ 2050. If the regression continues, we see the first support level to be followed as 2029 dollars. If there is no rise in tension in the daily political agenda while at 2029 support, and there is no tension in the daily political agenda, with the effect of the cooling of the agenda, we can see an ounce of gold again below the 2000 dollar level and we can watch a correction movement at these levels that will last 2-3 days. When we evaluate it in terms of upward movements, we can say that as long as an ounce of gold stays above the level of $ 2049, it winks at $ 2089, which can be a new record target. Our short-term main expectation is that it will fluctuate in the band range of 2049-2069 dollars for a while. There was no extraordinary development in the global markets and an additional expansionary public fiscal policy was not announced.

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