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π Gold: there is a new high! What's next?
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The price has updated historical levels, but no real predictions about the fate of this frenzied rally have been heard yet. The situation looks favorable due to high geopolitical tensions and looming problems in the US economy. But is it enough to continue the growth?
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This dynamic in gold is usually due to a Fed policy correction, but Powell reiterated on Wednesday that he is waiting for clear signals of a victory over inflation. Gold is usually in inverse correlation with bond yields, but now it is being supported by active central bank buying and consumer demand, particularly in China.
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Recent Comex data shows that money managers have built up long positions, which has also contributed to the rise in gold prices. The rise in open interest means investors have become more optimistic about the precious metal, rather than simply closing existing short positions. Exchange observers say that gold above the $2,115 zone is already extremely overbought, but up to $2200 buying interest continues to grow.
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There are two scenarios for gold in this situation - optimistic and not so optimistic.
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Optimistic (according to J.P. Morgan): The Fed's attempts to curb inflation, save banks from bankruptcy and take control of the cryptocurrency sector, along with the problems of Credit Suisse, Deutsche Bank and escalating military conflicts are clear signs of a global crisis. This means that the price of gold could rise by 30% or more in the next 1-3 years amid a general recession.
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Pessimistic: inflation will be contained, the Fed will start cutting rates already this year, the stock market will return to growth and investors will start to leave gold. But even with the moderate mood of speculators, the yield of standard gold assets can be 8-10% per year, but with regular technical drawdowns.
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So there is no other way up for gold. So, shall we buy?
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Profits to yβall!