विदेशी मुद्रा विश्लेषण और समीक्षा: 29.08.2019

29.08.2019 12:49 AM

Gold changes the standards

"Bulls" continue to dominate the gold market, while one little correction was immediately redeemed. Futures quotes and stocks of specialized exchange-traded funds have reached highest levels since 2013, and rumors about the return of the era of the gold standard only fuel interest in precious metals. This idea is being actively promoted in China, where they believe that the United States untied the dollar from gold several decades ago, because they wanted to take responsibility for order in the global financial system. Now Donald Trump has destroyed this order, so it's time to return to past values. If this happens, then XAU/USD can easily reach 2000.

In fact, the main driver of the growth of precious metals are trade wars, which help slow down the US economy and force the Fed to lower the rate on federal funds. As a result, the yield on treasury bonds and the US dollar should fall. The first behaves as it should, but the second, on the contrary, strengthens due to the weaknesses of its main competitors, which is also good news for gold. When the main world currencies, under the influence of the ultra-soft monetary policy of central banks-issuers, feel unwell, investors increase the share of precious metals in portfolios.

Some doubts about the continuation of the upward trend on XAU/USD emerged after the statement of the ex-president of the New York Federal Reserve, William Dudley, that the Fed should stop ignoring criticism of the president. Donald Trump is a threat to the US economy, and in order for him not to be re-elected in 2020, the central bank is obliged to raise rates. In 2013, following Ben Bernanke's announcement to stop asset purchases under QE, financial markets plunged into a tantrum, gold plummeted due to a soaring Treasury bond yield. The same situation could be repeated now if the Federal Reserve unexpectedly returns to monetary tightening. However, few people believe in this.

According to Citi research, if the ratio of S&P 500 and precious metal can rewrite the peak of 2018, the figure will increase by 25%. In this situation, gold can easily break through $1,600 per ounce and move higher. UBS predicts that it will reach $1,650 within 12 months.

S&P 500 to Gold Ratio

The precious metal is supported by central banks that are not tired of buying it. According to ANZ estimates, total purchases in 2019 will exceed 650 tons. Dedollarization, sanctions and a trade war force regulators to diversify their reserves. The People's Bank of China has significant potential in this direction: the share of gold in its reserves is a modest 3%.

Thus, the weakness of major world currencies, the fall in the yield of US treasury bonds (both nominal and real), high demand from central banks and ETF fans create a solid foundation under the bullish XAU/USD trend.

Technically, the implementation of the AB = CD and Bat patterns continues. Their targets at 161.8% and 88.6% correspond to marks of $1630 and $1815 per ounce.

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