How the historic collapse in oil prices affects producers

Contents

Is gold doomed to follow the collapse in oil prices

Is gold doomed to follow the collapse in oil prices
CONTENT

  • Gold fully won back all losses incurred in March.

  • The nearest resistance area is located at $ 1800.

  • Bitcoin dynamics after the March market crash looks much more faded compared to gold.

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Since March 16, gold prices have significantly strengthened, having won back all losses incurred on March 9-11. However, the rally began to show signs of weakness, giving signals of bearish divergence.

On April 20, the oil market experienced a tremendous collapse in prices. This made the market participants wonder: how will other commodity assets behave now, will they not follow this bearish path after oil? In an attempt to guess the next victim, Twitter user @Russian_Market suggested:

“After the oil collapse, we will see the gold collapse” [transl. from English]

Let’s take a look at the charts for gold and see if it is facing a decline. We have recently analyzed the correlation between bitcoin and oil prices, so now we will focus on comparing the dynamics of gold and BTC..

Gold

Gold won back all the losses it suffered as a result of the March 9-12 decline, when almost all markets sank. As a result of the fall, the price reached the support area of ​​$ 1450, which held the bears back for almost the entire 2019.

Gold found a bottom around $ 1.451 on March 16 and the price has gone up since then..

Is gold doomed to follow the collapse in oil prices

Several bullish engulfing candles appeared on the chart, however, along with this, the market began to give clear signals of weakening. The 3-day RSI has formed strong bearish divergence signals. This could indicate the possibility of an early price decline with the potential for yet another test of the $ 1450 support area.

On the weekly chart, the nearest resistance area is at $ 1800.

Is gold doomed to follow the collapse in oil prices

She participated in the formation of the triple top at the end of 2019. Accordingly, the current growth may well drown at this level.

In addition, strong bearish divergence signals can be seen on the weekly timeframe, which also confirms the bearish market potential..

Comparison with bitcoin

Comparison of the price dynamics of gold (candlesticks) and bitcoin (orange line) on the chart shows that BTC recovered much worse after the market collapse on March 9-12. Compared to the level of March 9, gold has strengthened by 3%, while Bitcoin has fallen in price by 21%.

Moreover, gold has already managed to set a new high relative to March..

Thus, gold has fully won back all losses incurred in March. However, the precious metal is giving strong signals of bearish divergence on the RSI. The most likely reversal level of the current bullish trend could be the $ 1800 area.

Do you believe there is any correlation between Bitcoin and gold dynamics? Share your opinion in the comments!

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