Gold has seen its price suffer after another failed attempt to cross the $3,429 resistance area.
XAUUSD – Daily Chart
XAUUSD has suffered four straight days of losses before there was a real bounce in the dollar. It is also a worry that the daily chart sees a fourth attempt at a breakout failing.
It has been a strong year for anti-dollar themes, and that has led to a huge surge in ETF flows for gold and bitcoin. According to J.P. Morgan Asset Management, total assets under management in gold ETFs topped $170 billion in April. After the January 2023 arrival of crypto ETFs, they are now catching up to gold fast.
The data will be important to watch in order to see if it was a short-term diversification move from investors or if it will usher in a new trend.
There is now a worry that the dollar collapse theme was overdone as the U.S. signs its trade deals. However, there was obvious weight for new investment into gold, as author Nicholas Naseem Taleb noted.
“You can see the accumulation of gold in the central bank reserves, and the behaviour of gold over the past 12 months. It didn’t start with Trump’s policies, of course. It started with Biden when he froze the accounts of people connected to Putin, thinking that it’d be limited there, but people not connected to Putin decided to stay away from the euro and the dollar”.
“Gold is effectively now the reserve currency,” he said. “Transactions take place in dollars, euros, usually dollars, and at the same rate; however, they get converted back into gold and we can see it from the accumulation of reserves”.
However, the latest price action is showing the $3,429 level to be very stubborn. A correction may unfold, but any break above should be taken seriously.
