Gold has stood the test of time as a reliable measure of prices and a symbol of stability during times of economic uncertainty. In the face of rising prices across all sectors, it comes as no surprise that the price of gold is also following suit. While gold may not have surged significantly in relative terms due to the disinflationary monetary policies of central banks, it is only a matter of time before it catches up and sets new all-time highs. When looked at the long term gold price chart (gold in USD terms), it becomes clear that gold is expected to move higher. Moreover, when expressed in leading world currencies other than the USD, it is clear that gold is already in the process of setting new all-time highs.
This article explores the factors behind gold’s objective measure of prices and its potential to soar in leading world currencies, ultimately answering the questions “is gold expected to move higher” as well as “is gold set to reach new all-time highs.”
We take an objective and data-driven approach in this article. We try to avoid, at all costs, bias and preferences. Although we have a lot of confidence in our recent gold forecast, we prefer to take a different approach to answer the aforementioned questions. That’s why we cover the following points in order to answer the aforementioned questions:
- 1. Why Invest in Gold When Rates Are Rising
- 2. Gold as an Objective Measure of Prices
- 3. The Disinflationary Effect on Gold
- 4. Gold Price Chart Analysis
- 5. Gold in Leading Currencies
- 6. Is Gold Expected To Move Higher?
- 7. Is Gold Set To Move To New All-Time Highs
1. Why Invest in Gold When Rates Are Rising
With interest rates reaching levels not seen since 2001, investors face tough decisions on where to allocate their funds. Although assets like bonds may offer attractive yields in a rising rate environment, gold remains a preferred choice due to its ability to preserve value during inflationary times and instill confidence during economic uncertainties. The price of gold often reflects market sentiment, acting as an inflation hedge and/or a safe haven in times of crisis.
Note that our point is that gold can be rising either as a reaction to inflationary pressures, or in times of crisis, or both. The latter does not occur often. We try to point out the dominant dynamics influencing the gold price.
2. Gold as an Objective Measure of Prices
Amidst soaring inflation rates and skyrocketing prices, gold stands as a steadfast benchmark of real value. As all prices move higher, the price of gold inevitably follows, albeit with a slight lag. This lag can be attributed to the disinflationary monetary policies implemented by central banks worldwide. Yet, despite this lag, gold’s reliability as a measure of prices remains unparalleled, making it an essential asset for investors seeking an objective anchor in turbulent economic times. As other investments may experience temporary surges or corrections, gold provides a consistent gauge of true value and purchasing power.
3. The Disinflationary Effect on Gold
The relative lack of a significant price surge in gold compared to other assets is a direct consequence of the disinflationary monetary policies pursued by central banks. As these policies aim to stabilize or reduce the general price levels of goods and services, they can impact the immediate upward trajectory of gold. However, it is essential to recognize that these disinflationary policies are temporary and are not reflective of gold’s long-term value. Eventually, as the inflationary pressures build and the impact of central bank policies diminishes, gold is expected to surge and make up for the relative lag experienced during the disinflationary phase.
4. Gold Price Chart Analysis
The gold price chart over the past 50 years presents an intriguing pattern known as a “cup and handle” reversal, which bodes well for gold’s future prospects. The “cup and handle” pattern is a bullish continuation pattern often seen in technical analysis. It typically indicates a brief pause in a rising trend before the price resumes its upward trajectory. In this context, the “cup” portion of the pattern represents the gradual decline in the gold price, forming a rounded bottom. Conversely, the “handle” is a minor retracement that follows the cup formation.
The chart showcases this pattern, signaling a potential bullish breakout in gold prices. The cup formation, spanning over several decades, indicates a prolonged accumulation phase, during which investors have gradually built positions in gold. As the cup formation concludes, the handle portion serves as a consolidation before the next upward move.
Within the handle portion, we observe a recent rally that brought the gold price close to testing its previous all-time high, further validating the pattern’s potential for continuation. The presence of higher lows within the handle reaffirms the market’s strength and suggests an eventual breakout towards new highs.
Additionally, the long-term channel depicted in the chart contributes to the overall bullish sentiment for gold. This channel showcases the price boundaries within which gold has been trading over the past 40 years. The consistent respect for these upper and lower boundaries indicates the market’s adherence to a well-defined trend.
The channel’s upper boundary acts as a resistance level, and the lower boundary serves as a support level, guiding the price action over an extended period. The fact that gold has remained within this channel for decades reinforces the significance of these levels in determining future price movements. As of the present, the gold price is approaching the upper boundary of the channel, signifying the potential for a major breakout.
Traders and investors alike closely monitor such long-term channels, as they provide valuable insights into the market’s dynamics and prevailing trends. The intact nature of this channel suggests that gold remains in a long-term uptrend, with the potential to move higher and test new all-time highs.
The combination of the “cup and handle” reversal pattern and the intact long-term channel paints a promising picture for gold’s price trajectory. Gold price chart analysis points towards a bullish breakout in the near future, with the potential for gold to set new all-time highs. However, as with any market analysis, there are risks and uncertainties to consider, and it is essential to remain vigilant and keep abreast of market developments.
Note, though, that the above charts show the price of gold in USD. Just these gold price charts, in and on themselves, suggest with a high level of confidence that gold is expected to move higher and set new all-time highs.
It will get even more interesting, as we will see in the next sections, when considering gold denominated in currencies other than the US Dollar. Gold has already made new all-time highs in several leading world currencies.
5. Gold in Leading Currencies
While gold is primarily measured in USD terms, its value is accentuated when expressed in other leading world currencies, such as the Japanese Yen and Australian Dollar.
That’s why it is misleading, to some degree, to only focus on the gold market when looking at the gold price chart denominated in the US Dollar.
Over the last 12 months, these currencies have shown a pronounced upward trend when paired with gold. This demonstrates the strength of gold as an objective measure of prices in different regions, offering investors protection and stability in relative terms.
The most pronounced view is how gold performed over the last 4 years, when denominated in 9 leading world currencies. All of these charts feature a strong uptrend, either in the form of a continued uptrend (gold in Japanese Yen, gold in Indian Rupee, gold in British Pound) or in the form of a W-reversal in the form of a rounded reversal which is a very powerful chart pattern (gold in Chinese Renminbi, gold in Swiss Franc, gold in South African Rand).
Looking at the 4-year gold price charts denominated in 9 leading world currencies we observe bullish patterns that suggest gold is expected to move higher, in 2023 and beyond.
Furthermore, examining the past decade, from 2012 to 2023, reveals that gold has shown significant gains against all leading world currencies, emphasizing its enduring appeal and status as a reliable store of value.
Below are the same gold price charts in 9 leading world currencies, but over 10 years. The secular uptrends in gold in 9 leading currencies are solid. Gold has already made new all-time highs in 6 out of the 9 world currencies.
6. Is Gold Expected To Move Higher?
As the era of monetary tightening approaches its conclusion, the spotlight is on the trajectory of gold prices, and the indications are increasingly optimistic. Over the past decade, the value of gold has soared across various global currencies, showcasing its resilience and allure as a preferred investment choice. Moreover, this upward trend in gold prices is not confined to the long term; even in the last 12 months, gold’s performance across currencies has been remarkably bullish.
One intriguing correlation that has caught the attention of astute investors is the close link between gold and the Swiss Franc. Historically, movements in the Swiss Franc have been closely aligned with gold’s trajectory, reinforcing the notion that the precious metal is poised for further gains in 2023 and beyond, possibly extending into 2024. As we delve deeper into the dynamics of this relationship, it becomes evident that gold’s allure as a safe-haven asset remains robust, elevating its prospects in the years to come.
7. Is Gold Set To Move To New All-Time Highs
Indeed, gold is SET to move to new all-time highs as its historical strength and resilience come to the fore. The lags experienced in relative terms are merely temporary, and as inflationary pressures continue to build, gold’s value will undoubtedly surge. The objective measure of prices that gold represents, coupled with its potential in leading world currencies, solidify its position as a valuable asset in any well-diversified investment portfolio.
Gold’s enduring appeal as an objective measure of prices is undeniable. While it may have experienced a relative lag in the face of disinflationary policies, its long-term trajectory points towards new all-time highs. Inflationary pressures have risen a lot, interest rates have risen a lot, still gold has shown resilience. That’s because of gold’s objective measure of prices.
In leading currencies, such as the Japanese Yen and Australian Dollar, gold’s strength is evident, reaffirming its status as a universal store of value. With the potential for central banks to adopt more inflationary policies, gold is indeed expected to move higher and SET to reach new all-time highs, making it an attractive investment option for those seeking stability in uncertain times.