Gold: Why central banks are stockpiling yellow metal?
The global inflation crisis and the projected volatilities of the greenback are the primary reason to see central banks falling in love with precious metals instead of greenbacks.
Like in history, the love for gold stems from its unique strength that is relatively stable thanks to its independence from any individual economy, especially in times of high inflation and volatility.
Additionally, the yellow metal offered extra function in 2022. Since March, the West’s sanctions on Russian have frozen much of Russia’s foreign currency reserves. As such, for those countries that have to keep trading relations with Russia, Turkey, for example, the shinning commodity offers an alternative to exchange.
Gold price: Technical Analysis
Either from the weekly or the daily’s technical chart, the price of gold has demonstrated a strong momentum into the new year. On the weekly picture, the price has climbed for six straight weeks and moved above all the major moving averages.
In the near term, the price might take a breather since both the weekly and daily RSI have reached the overbought territory. However, the mid-term sentiment should stay valid if the price remains in the ascending trajectory. In this scenario, the buying opportunity may surface if the price pulls back to the imminent support near $1920. On the other hand, the next challenge in view sits at around $1960.