[Gold has been going up in an incredible rally that is unlike anything anyone expected. And it broke the never-before-seen level of $2,000 a few days ago! This is fantastic. Jan]

Gold’s mega rally took another upturn on Tuesday as it surpassed another major hurdle at $2,000 per ounce.

Spot gold advanced 1.4% to $2,004.97 per ounce by 3:20 p.m. EDT, after reaching an intraday high of $2,009.20 earlier.

BULLION HAS SURGED MORE THAN 30% SO FAR THIS YEAR AND IS ONE OF THE BEST-PERFORMING ASSETS IN 2020

Bullion has surged more than 30% so far this year to a record high and is one of the best-performing assets in 2020 as a result of increased safe-haven demand during the coronavirus pandemic.

Investors are driven by the belief that the metal will hold its value better than other assets as fallout from covid-19 ripples through the global economy.

In the US, the world’s largest economy, central bank stimulus has pushed inflation-adjusted bond yields to record lows, making non-yielding gold more attractive. The dollar has also weakened sharply, making bullion cheaper for buyers with other currencies.

Gold breakout

Source: Reuters

“The never-before-reached $2,000/oz is a major psychological resistance level, with gold’s 49-year trend channel resting just below it at $1,983,” said Commerzbank technical analyst Karen Jones.

“Only an end-of-month or, better yet, end-of-quarter close above these levels will signal a break from the channel,” she added.

However, because the rally has been so fast, a downward correction is likely and could be brutal, analysts said, before the market attempts another stab higher.

Source: Reuters

Early support is coming in around its 20-day moving average at $1,875 and the bottom of its 4-month uptrend around $1,830.

“Below that is more powerful support at the 20-week moving average, currently at $1,755,” said Tom Pelc, an independent technical analyst, formerly of Nomura and RBS.

Such a fall would not necessarily equate doom the longer-term uptrend, analysts posited.

Source: Reuters

“We continue to see this improving volatility backdrop, so there’s no sign that the long-term trend is changing,” said Richard Adcock, a former UBS and now independent technical analyst. “The market can carry on higher than people expect.”

If resistance is broken, Fibonacci extensions offer short-term targets. These are based on the idea that a rally will extend in predictable proportions extrapolated from a previous rally.

“One is at $2,067, another comes in at $2,286,” said Pelc.

“Lucas ratios — a tool using a sequence of numbers similar to Fibonacci’s — suggest gold could rise to $3,598.80 an ounce in 4-5 years,” he added.

Source: https://www.mining.com/gold-price-rally-testing-2000-hurdle/