The collapse of gold as the USA election battle wages on
I have been slightly distracted from writing this past 48 hours, and spending more time practicing trading. Besides that, the news of the imminent war in USA over the election, the alleged invasion by the CCP and whatever else covid brings – all of that has had my focus somewhat distracted. You can well imagine the scenario. The world is not in a peaceful place right now. As a result penning a few words for a few pennies – which is what this blogging has boiled down to – has taken less precedence.
Anyway, I’m a writer and I like to keep a journal for myself too, so let me put down my thoughts on the three topics mentioned in my life at present. Perhaps it’s due to the USA political crisis or despite of it but the gold price has tanked by almost 7% in the past three days. The chart looks like a waterfall, as price fell of a cliff. The price of gold is not my main focus for trading, but I like to keep an eye on it. Having reached resistance at $1960, it fell rapidly back down to support at $1827 and is now showing signs of bouncing back.
You would think gold was a safe haven now as the dollar buckles under the immense pressure of the USA election scandal and historic shenannigans, if that’s the polite word to label it. I’m no expert on gold and perhaps someone else can enlighten us on the fundamentals around gold’s behavior. Sentiment appears to have swayed though.
On the gold chart we can see that the RSI on the 4 hour has hit major oversold region at 20 and is just now in bounce mode. We will need to wait until the commodities markets and traders open on Monday. The weekend has put them on pause. And this has given the election battle a chance to take center stage. And what a show. The whole world is watching the big steal or the big whatever it is. I’m just a distant outsider to the event.
As for covid and the new lockdown – my beaches remain banned and masks are the new compulsory fashion appendage. Some like it, so I presume it will become trendy in time to come. On my personal front, I am enjoying some demo trading on a free platform called MetaTrader5. My scalping of 1% at a time long or short, is making me a few gains, and feels like I’m gaming, so can be quite entertaining. It’s the ultimate strategy game, timing entries and exits, observing the candlesticks and trend lines to predict the next move.
It helps that I’m given some free demo bitcoin to trade with as leverage on margin, where I set the lot size each time and have room for a stop loss and take profit target. I am having so much fun, trading is as entertaining as gaming. And you can earn. Even the demo account is allowing me to trade in real time on the live price chart, so I learn a lot. Risk management is crucial, like setting a smaller lot size, not being greedy or impulsive. Also knowing when to cut your loss, how to tolerate loss, especially if the lot size is small. Conservative trading for 1% at a time is fine for me. If I do that a few times a day I will be happy.
Such scalping trades do not depend on the market being bullish or bearish. Either is fine, and with the help of bollinger bands and RSI and MACD, I time my trades on the 15 minute chart. And then I’m in the trade only for a few minutes unless I am stuck in a range bound market or a losing trade. Then I try to wait a bit to see if it works in my favor. If not and it reaches my loss threshold, then I cut the loss. It feels as if I am sparring against myself, so I like to see my trading skills get a workout. As long as the wins outweigh the losses, as they are, then I’m happy.
So that is my life at present, along with fantastic outdoor summertime hikes along the cliffs above the ocean... I have a balanced time of recreation and relaxed fun, with few worries. Covid will come and go, my immune system is fine. The CCP may take over the world including USA and my own country right now, but I don’t mind. I have nothing to lose and am ready for the new fashion. This may be the changing of the guard and the new era, but I will sail through it without too much concern. Adaptability is the secret.
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Hard to say what is going on with gold. It has to hold the resistance level or could see a significant drop.
One theory might be the gold market is seeing that with all that is going on, the upcoming recession (depression) is going to be deflationary, not inflationary. This was what caused the move up through 2020, inflation expectations.
Or it could just be people are selling gold and piling into Bitcoin.
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I agree, gold is historically one of the most sought-after assets on the planet, used as a refuge by large numbers of investors around the globe.
This asset was bought in large quantities throughout 2020 because many investors closed positions or sold shares of companies (eg airlines) and bought gold to protect capital.
It is possible that having a gap this year with the possibility of investing in shares and other assets such as bitcoin. Investors who bought a lot of gold last year may be selling part of their positions to reinvest in stocks and new assets.
In my opinion it can be a cause.
Greetings.
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Aha, it seems like their is a sea change or turning of the tide in investment, from what you are saying. If this shift now so early in the new year is anything to go by, then we could see quite a unique year financially in global macroeconomics.
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Hey there many thanks for your insights on the gold price. That would be amazing - if investors are shifting out of gold and into bitcoin. You would think there are enough intelligent people around to see the benefit of adjusting their portfolio like that.
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