Gold (XAUT) has had a good week, surging along with other traditional assets and holding up better than almost everything else (crypto included) amid the market reactions to COVID-19. While it had before been looking like it wanted to correct further, a clear long term trend for gold seems to have fizzled in the chaos, and where it will trend now is anybody’s guess given gold’s often-held status as a safe(r) asset to hold.
Starting on a daily chart, we see that this week’s market surge seems to have broken what had been an RSI downtrend. Gold has whipped back above all its EMAs, nearly back to regional highs.
If we wanted to, we could consider the price/RSI between November to now a hidden bull divergence, with higher price on lower strength. This would suggest a trend continuation, in this case up.
Moving to a weekly chart, we again see this same hidden bull, although only if we are counting candle bodies and not wicks – an exception that maybe is more forgivable given the extreme volatility of late. The histogram here is interesting, as it may put in a sharp reversal for the week it if closes like this.
If gold could consolidate up here a little, we might start anticipating that its HTF uptrend is going to continue, whereas before it had – with a bevy of bear divergences – been looking like a larger reversal.
Finally, we should glance at gold compared to the S&P500 index. It’s very clear that gold has far outperformed equities these past weeks.
Many are predicting a deflation shock to the global economy – people will hoard dollars and thus it will not be available within the system – followed by an inflationary shock – all the money-printing that will follow in the coming months will reduce the value of fiat currencies.
Nobody knows if this will pan out, or where gold will fall within it; but so far, it is living up to its safe-haven status.
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