Gold has been on a steady rise since breaking above its flag from early December, with the asset’s trend line and both the 21 and 50 day moving averages remaining intact. This development raises the possibility of a squeeze, potentially shaking out weak hands that have been present in the market over the past two months. While gold has been consolidating within a range during this time, its current momentum suggests that it may be poised to challenge its all-time highs. In this blog post, we’ll delve into the factors driving gold’s upward trend and assess the potential implications of a break above its ATH.

Firstly, it’s important to acknowledge that gold has been consolidating within a range for the past two months. This period of stability has allowed weak hands to exit the market, potentially creating a more robust and supportive environment for the asset’s continued growth. As gold continues to break above resistance levels, it’s likely that these weak hands will be squeezed out, leading to increased buying pressure and further momentum in the uptrend.

Secondly, the trend line and moving averages remain intact, indicating that the underlying fundamentals of gold are still supportive of its upward trajectory. The 21 day moving average has been acting as a solid floor for gold, while the 50 day moving average has been providing a more gradual slope for the asset’s ascent. As long as these trend lines remain intact, it’s likely that gold will continue to attract buyers and push higher.

Thirdly, there are several macroeconomic factors that are contributing to gold’s current momentum. Central banks have been net buyers of gold for several consecutive quarters, with the World Gold Council reporting a 12% year-over-year increase in central bank gold reserves during Q3 2022 alone. Additionally, the ongoing COVID-19 pandemic has led to increased interest in safe-haven assets like gold, as investors seek to diversify their portfolios and protect against potential risks.

Lastly, it’s worth considering the historical performance of gold during times of economic uncertainty. As a non-yielding asset with a long history of stability, gold has traditionally performed well during periods of high inflation, currency devaluation, and geopolitical tensions. With global economies facing numerous challenges, including rising inflation rates, the ongoing pandemic, and political instability, gold may be poised to capitalize on these concerns and continue its upward trend.