Why gold has become attractive to investors?

Fundamental analysis

Gold has become attractive to investors, here we will examine the attractiveness factors of gold in a basic and technical way

Gold Gleams Brighter:

Why the Precious Metal is Attracting Investors in 2024

Gold has emerged as a star performer in 2024, defying expectations and climbing steadily in value. This resurgence has grabbed the attention of investors seeking a safe haven in a volatile market. Let’s delve into the reasons behind gold’s appeal and explore what big investors are saying, along with key technical levels to watch.

Several factors are contributing to gold’s appeal:

Hedge Against Inflation: Inflation remains a top concern for investors. As the purchasing power of currencies weakens, gold, a historical hedge against inflation, shines. Its price tends to rise alongside inflation, offering a shield against rising costs.
Economic Uncertainty: Geopolitical tensions and potential economic slowdown are fostering a cautious investment climate. Gold, perceived as a safe haven asset during turbulent times, is attracting investors seeking stability and a potential diversification tool for their portfolios.
Dollar Depreciation: A weakening U.S. dollar can make gold, priced in dollars, more attractive to foreign investors. This dynamic can further increase demand and push prices upward.

Review of recent fundamental factors:

You may wonder why global gold is still on the rise?!

Traders backed off after strong data releases from the United States regarding the timing of interest rate cuts starting in June.
If you recall, one of Federal Reserve Chairman Jerome Powell‘s recent remarks emphasized monitoring economic data week by week and month by month.
Based on this factor, it can be predicted that due to the strong economy of this country, the Federal Reserve may delay the process of starting rate cuts.
The answer lies in recent events such as Israel’s attack on a neighboring residence of the Islamic Republic’s embassy in Syria and other geopolitical crises. Whatever the case, gold is considered a safe asset, and traders scramble to buy it in such situations.

Big Investors Weigh In:

Industry titans have also expressed their optimism on gold.

Ray Dalio, Bridgewater Associates: Dalio, a hedge fund titan, recently acknowledged gold’s potential as a hedge against inflation and a possible devaluation of global currencies.
Stanley Druckenmiller, Duquesne Capital: Druckenmiller, another prominent investor, has expressed his belief that gold could play a significant role in portfolios during periods of stagflation, a combination of high inflation and stagnant economic growth.
Billionaire investor Bill Gates has also acknowledged gold’s potential as a portfolio diversifier.

Result: Gold’s appeal in 2024 stems from its ability to hedge against inflation, navigate economic uncertainty and potentially benefit from a weakening dollar. According to major investors, gold is likely to play an important role in the investment landscape.

Upcoming Targets, Support, and Resistance:

Predicting gold’s future trajectory is inherently challenging. However, analysts have outlined key technical levels to watch:

As you can see, the global gold ounce has been on an upward trend for 6 out of the past 7 days, successfully breaking new highs. Gold is currently in the red and correcting around 2269.

Targets: $2,310 per ounce and above have been cited by some analysts as potential upside targets if the current bullish trend continues.
Support: The level of $2,137 per ounce is considered an important support zone. A break below this level could indicate a potential price correction.
Resistance: The level of $2,300 per ounce may act as resistance in the short term. A decisive break above this level could indicate a further increase in price.

The Bottom Line

Gold’s allure in 2024 stems from its role as a hedge against inflation, economic uncertainty, and a potentially weakening US dollar. Big investors are taking notice, and the precious metal’s price reflects this renewed interest. As you navigate the market, keep an eye on the resistance and support levels mentioned to make informed trading decisions. Remember, gold is a long-term investment, and incorporating it into a diversified portfolio can offer stability during turbulent times.

Remember: This information should not be considered financial advice. Always conduct your own research and due diligence before making any investment decisions.

Happy trading
may the pips be ever in your favor!