Gold Price Predictions vs. Physical Ownership

Gold price rallied above $2,000 in late 2023 and it verified the breakout above this level. Will it rally?

In short, while this breakout seems bullish, there’s more to gold’s technical picture than just that.

Gold Price Predictions vs. Physical Ownership - Image 1

Namely, gold price has been moving back and forth recently, and we saw the following:

  1. Gold broke above its rising green resistance line, which had immediately bullish implications (and yet, miners barely reacted at that time)
  2. The rally that was likely to happen based on the above has probably already run its course, as we saw a top at the triangle-vertex-based reversal point (WHEN a resistance and support lines cross, a reversal is likely to take place – and indeed, we saw a top at that time).
  3. Gold once again failed to hold above its April 2023 high, and since previous invalidations were followed by sizable short-term declines, we are likely seeing one right now.

If you supplement the above with the bullish outlook for the USD Index, you get a really good chance of seeing lower gold prices in the next week and beyond.

Gold Price Predictions vs. Physical Ownership - Image 2

And… Do you remember about gold’s powerful weekly reversals?

I wrote about them previously, but it won’t hurt to write about them again, as the implications are so important.

In short, weekly reversals are very powerful events. Seeing them after a rally implies a reversal and the start of a big downswing. The decline might not be apparent at first as the price might move back and forth, but eventually it slides. We saw that kind of performance in early 2022. Gold price topped, then it moved back and forth and then it declined – hundreds of dollars.

This excessive move higher – and its likely invalidation – create a great trading opportunity, and given where stocks and the USD Index are (and how weak miners are), those might be the final days to take advantage of it.

Given how bullish the situation is on the USDX front, it’s simply very unlikely that gold will be able to hold above $2,000 for much longer. There’s been some uncertainty regarding interest rates and geopolitics lately, but when the dust settles, the markets will recall that gold can’t disconnect from the value of the currency that it’s priced in.

Gold might pause at about $2,000, but once this level is taken out, it’s likely to decline fast – likely to $1,940 or so, where we have the previous lows.

In my view, the biggest opportunity here is in the junior mining stocks (and I fully expect our profits in juniors to grow even more – just like they are growing today), but I think that gold will move lower in the following weeks as well.

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Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief