According to the World Gold Council, gold demand grew to 1053.3 tonnes in the first quarter (up 7%).
Central banks drive global growth with Q1 net purchases hitting six-year high
The reason why this is happening is quite simple – risks around the diminishing of the global economy.
If we have a look at the situation between GDP and production in developed economies, we will see that the situation is disappointing. As a result, the European central bank is trying to find ways to stimulate the growth. Despite the fact that the US economy beats its top – the risks of a full-fledged trade war is like the sword of Damocles, it could easily tear it down.
Starting from February 2019 Gold Futures were falling down. The situation changed in May. We assume that these are consequences due to the lack of agreement between the US and China.
By the way – on Wednesday President Trump officially announced that he has launched his 2020 election campaign. Earlier he wrote in his twitter ‘if anyone but me takes over in 2020 there will be a Market Crash the likes of which has not been seen before’.
As a result, all these future uncertainties about further political situation in the United States as well as the situation in the economy may press the financial markets but at the same time be positive for assets which are perceived as some type of “safe haven”, e.g. Gold.
Technical analysis of Gold
On the 1W TF we see a very strong resistance level on 1360 US/OZ (according to Fib extension – the next 50% Fibo level is on the same ratio). The trend line is heading up – locally the trend is bullish. If gold breaks the resistance line – next target is 1381.60 US/OZ.
According to the Elliott waves theory, we can face the trend impulse wave with the internal structure 5-3-5-3-5. In this case this movement up could be the 3-rd wave – it can bring Gold to $1450 in the mid-term period.