If you are considering to start buying gold or to add on to your current gold holdings, this article is for you.

The second half of 2019 has been an interesting time for gold.

Gold went from the year’s low of around $1270/ounce to a 5-year high of $1565/ounce – a huge 23% run, before settling for $1555/ounce to end the year.

This is an interesting time because I started to see a lot of ‘Buy Gold’ or ‘Gold is the Safe Haven’ related articles and contents sprouting around social media.

Clearly, people’s interest in gold has been rising especially with increasing uncertainties around global geopolitical issues.

With a simple price action analysis, let’s explore whether it is now a good time to buy gold? If now’s not a good time, then when’s the best time to do so?

TLDR –

In my opinion, gold would likely see its next bullish run if it is able to find a stable footing above the $1525 – $1610/ounce resistance zone (~RM215 – RM227/gram*).

*USD 1.00 = RM4.00 for ease of calculation


First thing first – Where does Gold Price stand now?

Again, gold is in an interesting phase right now.

From the gold’s 10-year weekly chart below, it can be seen the price of gold has finally broken away from a 6-year large corrective structure since the 2nd quarter of 2019.

This is significant, as the bulls (or the buyers) are finally taking over the overall trend after a 6-year tug-of-war against the bears (or the sellers).

In short, it can be said that the market is becoming more bullish towards gold for now.  

10-year weekly chart for gold. (Get your chart HERE)

That said, is it the right time now to buy gold?

As of now, the price of gold stands at a unique point.

Referring to the 10-year weekly chart below, the price zone between $1525 – $1610/ounce has been a key interaction point between the Bulls (Buyers) and the Bears (Sellers) over the past decade.

As an example, the first point of contact was in April 2011, when the Bears defended the zone from the Bulls for the first time.

Thereafter, the Bulls have defended the zone 3 times between 2011 – 2012. This showed the conviction of the buyers to defend the zone from being further pushed downward.

However, it was also in the same zone that the Bears actually took control in March 2013 and pushed the price below the zone – which started a 6-years long corrective phase.

At this moment, the buyers have been testing the zone twice since late 2019. That said, the Bears are clearly still holding the fortress firmly against the buying pressure.

In short, $1525 – $1610 is a key price zone that the Bulls (buyers) must overcome should we want to see a more significant bull run in 2020.

$1525 – 1610 is an important price zone with many interactions between Bulls & Bears over the past 10 years.

What if… the Bulls (buyers) manage to break above the zone?

Now, if the Bulls break the Bears’ defense on the key $1525 – $1610/ounce zone (RM215 – 227/gram), chances are this would trigger the Stop Loss orders of the Bears on the other side of the zone.

This would stop some key sellers out, and would likely lead to a change in the overall market bias to be even more bullish.

Should that happen, I am anticipating a more aggressive buying pressure from the market.

This upside would likely be going to continue until the next key resistance level of $1800/ounce (~RM254/gram) – a 12% potential upside from the $1610 level.

In short, I will be more bullish towards gold should price manage to overcome and find a stable footing above the key $1525 – 1610 resistance zone.

$1800 is the next key resistance should price breaks above the $1525 – 1610 price zone.

What if… the Bears (sellers) manage to defend their position at the $1525 – 1610/ounce zone?

We cannot say with 100% certainty that Bulls will take over the trend – what if the otherwise happens?

Let’s say the Bears (sellers) manage to defend the $1525 – 1610/ounce zone, chances are the price of gold will be pushed downwards away from the zone.

With that in mind, the next key price zone where the Bulls (buyers) would likely be active again would be the zone between $1365 – 1465/ounce. (RM 193 – 207/gram)

On that note, the gold price could either make a bullish rebound (green arrow) if the $1365 – 1465/ounce zone is well defended by the bulls. Otherwise, a further bearish momentum could continue if price breaks below the zone (red arrow).

$1365 – 1445 is the next key support zone should price is not able to make it above the current zone.

Good to Know – China has been buying gold at an increasing rate**

In my previous article, there is a mention of how China’s gold holding makes up less than 8% of the country’s total reserve.

However, global geopolitical issues, especially the US-China trade war which started in the second half of 2018 have made an impact on the rate of China’s gold reserve.

Since the 3rd quarter of 2018, China has been buying gold at an increasing rate (4Q2018: 0.5%, 1Q2019: 1.8% and 2Q2019: 2.2%).

On that note, geopolitical uncertainties are definitely part of the reason why gold price has been increasing in 2019.

China’s Gold Reserve (in tonnes) (3Q 2016 – 2Q 2019) [Source: World Gold Council]

No Money Lah’s Verdict

I have always enjoyed reading and studying about gold.

Gold’s unique characteristic from an economic and cultural perspective makes it one of the most interesting and valuable commodities in the world.

However, since gold is a volatile (and to some extent, speculative) commodity, I am more inclined to have the thoughts that people should approach gold in a well-researched manner.

To summarize from today’s article, I will be more bullish on gold should price breaks above the key $1525 – $1610/ounce zone as this will follow with a 12% potential upside (towards $1800/ounce).

Hope you enjoyed this read! 😊


Thinking about opening a gold investment account? Definitely check out the link below to get started!


Disclaimer: This article is written based on my best research as of the time of writing, and should not be considered as a buy/sell recommendation. Please do your own due diligence and/or seek professional advice when making your investment decision.

**Credit: Part of this article is made possible with the help of my friend, Mr. Varian Soong.

Mr. Varian Soong is an Economics graduate from University of Malaya. Being one of the brightest of his batch, he came in as the 1st runner-up in the 2017 CFA Institute Research Challenge. 

Also, he has completed CFA Level 2 professional paper and he is now pursuing his professional career as a Credit Analyst in Public Mutual Bhd. 

Connect with him on LinkedIn HERE.