The correlation between gold and coronavirus cases
Gold is one of the world's main safe haven assets. Its price tends to rise in times of crisis and high volatility, as has been seen in the coronavirus crisis.
In recent months there has been a staggering correlation between the number of coronavirus cases worldwide and the evolution of the price of gold, as can be seen from the following charts.
Source: Daily coronavirus cases, Center for systems for science and Engineering at John Hopkins University. Data range: From March 9, 2021 to July 23, 2021, capture made on July 26, 2021 at 10:00 pm.
Source: Admirals MetaTrader 5, GOLD, daily - Data range: from March 10, 2021 to July 23, 2021, conducted on June 23, 2021 at 10:30 pm CET. Please note: Past performance is not a reliable indicator of future results.
The chart above measures the evolution of the price of gold on a daily basis.
In it, you can see the strong bullish rally in the price of gold from the beginning of April 2021 to the end of May.
This rally took the price from $1675 per ounce of troy to 1915, representing an advance of more than 14% in less than two months.
Although, since mid-May the RSI indicator warned that the asset was entering the overbought zone, which anticipated a possible fall.
Trades took the opportunity to collect profits causing a sharp decline in the price and re-entering the market in the support formed around the 61.8 Fibonacci retracement level.
After a first phase of stabilization, the asset is consolidating between the 38.2 and 50 levels of the Fibonacci retracement.
It seems that finally, the coronavirus pandemic has stabilized and the decline in the number of daily cases begins. Will the same thing happen with the price of gold?
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