Gold is set to benefit from a new risk-off period, according to The Capital Observer, the research service provided jointly by Diapason Currencies & Commodities UK and Management Joint Trust in Switzerland.
The Capital Observer point out that acute periods of risk, as were experienced in March, are bad for all assets because of the massive deleveraging they provoke. Periods of residual risk however usually benefit defensive assets while risk assets retest down. These periods are usually accompanied by strong monetary accommodation as is the case today, or was the case for example from late 2008 into 2012 or during H1 2016. The Capital Observer expects a new risk-off period to materialize during May, perhaps into June, when defensive assets will outperform.
Gold looks set to follow this pattern. Following its brief, yet strong sell-off in March, The Capital Observer says Gold is breaking out to the upside. Their proprietary oscillators (lower and upper rectangles of the Chart*) suggest the uptrend will extend into midyear, possibly into the summer, with a target range of between 1,889 and 1,986.
(*Click here for an explanation of the chart).
See www.thecapitalobserver.com for further details on its research service.