Gold markets have been greatly influenced by the US dollar during the trading session on Wednesday, as the market has seen quite a bit of selling. The market has broken down towards the $1875 level by the time the Americans came on board, and quite frankly that is not a huge surprise considering all of the damage being done to global economies via the coronavirus. Furthermore, it is now reported that France is likely to lock the economy back down, perhaps even Germany will follow. That being said, the market is likely to see that the economic conditions are going to get worse before they get better, so it could continue to filter into the idea of a stronger greenback. That will continue to put negativity into the gold market.
Gold Price Predictions Video 29.10.20
Having said that, the reality is that eventually central bank printing of currency will lift gold, as it has been so highly negatively correlated to the value of the greenback. As money flows into treasury markets, that will work against the value of gold and the initial surge. However, the reality is that both the US dollar and gold can both move in the same direction. All you have to do is look at the 1980s to see how that is possible, as we have seen both rise for years in the past. That is when you have a major rush towards safety, which eventually both of those assets offer. To the downside, I believe that the $1850 level will be your next major support level, followed by the $1800 level which I think is going to be massively supportive.
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This article was originally posted on FX Empire