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Inflation pressure – opportunity for gold?

Date: 13.2.2023

Another Monday, another week for market opportunities. I woke up, made coffee, and checked the news. Many sources are claiming that despite January’s inflation was lower than before, it is now expected to get higher again. And I thought to myself, that this can only mean one thing. Possible opportunity on gold, because it was always regarded as safe haven – in other words, when inflation was rising, people intended to invest into gold. I have been following this instrument for quite some time now and saw many interesting things on the chart itself.

Another Monday, another week for market opportunities. I woke up, made coffee, and checked the news. Many sources are claiming that despite January’s inflation was lower than before, it is now expected to get higher again. And I thought to myself, that this can only mean one thing. Possible opportunity on gold, because it was always regarded as safe haven – in other words, when inflation was rising, people intended to invest into gold. I have been following this instrument for quite some time now and saw many interesting things on the chart itself.

First, I noticed (and anyone checking the chart probably) a massive correction from about two weeks ago. The price of gold rapidly dropped from 1951 USD per ounce to current 1855 USD per ounce. * This means a 5% discount for us traders. I was checking for the reasons behind the drop, and all I could figure out was the inflation, FED and ECB meetings and of course, interest rates. When the price got steadier, I performed some technical analysis. From the chart below, I noticed the bearish channel. This channel was forming from 3rd of February until 9th of February, when my prediction turned out to be correct. When the channel “ended” it was followed by a small drop. After the price found a support level, it has again started forming another pattern – falling wedge. And if theory is any correct, after the channel closes, the price could rise.[1]

Because of volatility on the markets, I decided to do also fundamental analysis. Better be safe than sorry. As for important market events for the next 3 days, there are three things that could have major effect on the price of gold.

- Today EU will hold meetings, where they will discuss EU economic forecasts.

- Tomorrow USA will release monthly and yearly CPI which have great effect on USD and eventually on gold.

- On Wednesday ECB president Lagarde will hold speech.

So, my fundamental analysis is as follows. EU is very close to the ongoing war and members are helping financially. Meaning that there is a lot of burden on the euro.  On the other hand, USA is one of the leading economies in the world, and their inflation rate is important for the price of gold. And last, ECB meeting can bring some basic volatility to the capital markets. After rereading the technical analysis and considering the fundamental part, I have decided to go with long position for short/mid long term.

*

Obrázok2

* Past performance is no guarantee of future results

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.

Link to 5 year chart: https://www.investing.com/commodities/gold

Date: 24.3.2023
S&P 500 under pressure

News lately are more or less spinning around the problems of the banks and volatility of currencies or inflation. The saga of banks collapsing is still reaping fear in investors. And accordingly, central banks of multiple countries are taking actions. US Fed, ECB and Bank of England decided to raise the interest rates again. ECB announced that it could raise again in May, while US seems it will leave it at this point if circumstances will not dictate otherwise. Fear of investors is always leaving negative impact on the market, and so did this time. I am talking about S&P 500, American index that is tracking 500 American companies. However, it is not the only index suffering at the moment.

Date: 22.3.2023
ChatGPT got a competition

Curiosity got better part of me, as probably is the same with many other people, and I went to try what ChatGPT can offer me. I had to admit that I was very surprised. It is something completely new and innovative. It basically knows answer to almost everything (happening before 2021) and can help you in many ways. However, I saw some discomfort of users, when they found out that Microsoft decided to charge a subscription for it. But hey, on the other hand, they need to get the investment back in some way. And to make things even worse, ChatGPT got a competition – Bard, AI of Google.

Date: 20.3.2023
The fall of Turkish lira

Among the news about the collapse of Credit Suisse, and how UBS agreed to buy them for a little over 3 billion USD, there was another interesting news that caught my attention – Turkish lira is rapidly falling and is on the record low against American dollar.  Lira has always been very volatile, compared to other currencies, but this was something else rather than normal volatility. I decided to dig in and check what is the cause.

Date: 17.3.2023
ECB raised interest rates

Almost any news site that I opened, was reporting about the ECB’s decision yesterday to raise the interest rates for 0,5 point. And almost every article was guessing, what this could mean amidst the bank crisis around the world. In other articles there were news about the fall of Credit Suisse. I decided to make here a summary of things that I found out, to easier decide about the trade later.

Date: 15.3.2023
Chicken problem around the world

I quickly jumped to the store in the morning to buy eggs for breakfast, and I was negatively surprised about their price. I understand that inflation and everything could push the price up, but 80% and more for the eggs compared to when I bought few months ago is a little too much. I decided to investigate the matter immediately.

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.97% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.