Gold Forecast: Price Breakdown Or Pre-Fed Fake Out?

Technical Analysis Expert & Editor @
January 29, 2020

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Gold was trading lower, and silver was down sharply earlier this week. Significant moves up or down just before a Fed announcement usually reverses a day or two later - this time should be no different. 

Some speculate Tuesday's drop in precious metals is due to fears over the coronavirus. If so, then gold should be heading higher, in my opinion. Everything I've read says the epidemic is just getting started and will likely exceed the 2002 SARS outbreak. The number of confirmed cases will likely peak in March. Just overnight claims jumped some 60% to 4500 infected. This thing is ramping up - not declining.  

My guess is Tuesday's decline in precious metals is simply pre-Fed shenanigans. Often, manipulators will run stops and shake retail traders out of leveraged positions to create liquidity before the next big rally. That's what this feels like to me.

A Mid-Cycle Consolidation

This mid-cycle consolidation is similar in depth and scope to last June. The low likely arrived at $1536.40. After this pre-Fed fake-out, gold should continue its advance into March, potentially testing $1700 or higher. It would take progressive closes below the 50-day EMA to suggest a more profound correction unfolding. 

As a rule, I try not to put too much stock into sharp price movements one day before a significant Fed statement. Most of the time, prices reverse and go the opposite direction a day or two later. 

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AG Thorson is a registered CMT through the MTA and an recognized expert in technical analysis of the precious metals markets. He is also the Editor of where members receive daily updates and regularly scheduled reports 3-days a week. He prides himself on making his analysis easy to understand through the use of adaptive and creative charting methods. You can reach AG at [email protected].

The term “carat” comes from “carob seed,” which was standard for weighing small quantities in the Middle East.
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