AngloGold Ashanti making Diamonds! - New target to R451.84

13 Feb

Diamond Formation (Broadening) has formed on ANG.

This is a rare formation that resembles a Diamond.

It's also a formation between a tug of war between the Bulls and the Bears, until there is a breakout.

Now either I'm a Gold bullion, or intution is just telling me we are in for a breakout to the upside.

And funny enough the indicators don't agree as they're mixed.

Price >20
Price<200MA
Target R451.84

FUNDAMENTALS WHY LOWER INTEREST RATES BOOSTS GOLD:

Now before I go I wanted to share my fundamental view on why I think gold is in for upside. And it's because of the idea that the Interest Rates will remain down and even be cut up to 125 BPS.

But why would lower interest rates lead to a gold run up?

Here is some food for thought.

Remember when it comes to interest rate cuts it means the following:

Stimulates economic growth

This makes borrowing cheaper as interest rates are lower.

And it encourages more spending and investments by individuals and businesses.

Boosts buying from consumers

Also, with low interest rates it entices people to buy more.

And this is because the cost of loans drops.

This leads to them buying more homes, cars, and other goods.

There are other elements, but you get the idea.

Now, lets consider why lower interest rates could mean the gold price will rally

Reason #1: Lower interest rates and a weaker US dollar helps the gold price

When interest rates drop, the yield on bonds and savings accounts typically declines.

And a weaker dollar makes gold cheaper for people with other currencies.

It's like gold goes on a global sale, and everyone wants a piece!

So, this will drive up its demand and the price.

Reason #2: Investors get out of low yielding markets and into gold

Remember that when interest rates are high, investors move to high yielding markets.

They like to keep their money in the banks, bonds, money market or any other high interest savings accounts.

But when interest rates drop, investors don’t make much of their money from these assets.

And so, they will look to invest in markets like gold, which will drive the price up.

Reason #3: The golden safe-haven will prevail!

With interest rate cuts, it normally signals signs of economic uncertainty or weakness.

And during these times, investors will often seek out safe-haven assets.

Gold is a classic example of a safe haven that investors will look to buy.

And this golden attraction will help push the price up.

We need to wait for the breakout to act though...

Until then, we can observe and share our biases.