Gold Price Forecast: The Bottoming Process Continues as Bearishness Deepens

The recent price action in precious metals has been surprising, considering the weaker dollar and the massive downside surprise in June CPI.

In my view, those developments alone should have propelled gold easily above $4,100. So, what drives the current weakness? My best guess is renewed tensions with Iran.

Our Gold Cycle Indicator remains deeply oversold, and I continue to believe we are approaching an important cycle low. It would take a sustained breakdown below $3,900 to support the more bearish downside target of $3,500—a scenario I still view as the less likely outcome.

Our Gold Cycle Indicator is at 16; the most oversold since late 2022. 

US DOLLAR: The dollar fell sharply after Tuesday's weaker-than-expected CPI report (-0.4%) and retested support near 100.50. Under normal circumstances, that kind of dollar weakness should have sent gold comfortably above $4,100, but it didn't, which I viewed as a red flag.

Precious metals likely need a sustained breakdown in the dollar below yesterday's 100.35 low to regain upside momentum. Conversely, a sustained breakout above the short-term trendline in the dollar (101.20) could add bearish pressure on the metals complex.

GOLD: Gold posted a fresh closing low as we approach the end of the expected timing window. The weaker-than-expected CPI report and the resulting dollar weakness should have been enough to push gold well-above $4,100, but that failed to materialize. To me, that suggests the recent weakness has more to do with renewed tensions surrounding Iran.

The $3,900 level remains my line in the sand. It would take a sustained breakdown lasting more than three days below that level to activate my alternate downside target of $3,500-$3,600. Until then, I continue to watch for evidence that a meaningful bottom is forming.

SILVER: Silver posted fresh lows in July as it approaches the lower boundary of its target zone. A decisive breakdown below $54.00 could trigger a backtest of $50.00. If gold confirms its alternate downside target between $3,500 and $3,600, silver could slip briefly towards $45.00 in a worst-case scenario.

SILVER MONTHLY: If silver fails to hold support near $54.00, it risks a retest of the breakout area around $49.50, which I would view as a very attractive long-term entry point. I'd be very surprised if prices remained below $50.00 for more than a few days or, at most, a couple of weeks.

PLATINUM: Platinum continues to hold up better than both gold and silver. A series of progressive closes above $1,700 would provide constructive evidence that a meaningful bottom is in place. If prices weaken further, major support remains near $1,500.

GDX: Miners posted fresh lows, finishing below the lower end of my target zone. The next major support level comes in near $68.00. Meanwhile, the MACD continues to display a positive divergence, suggesting downside risk is becoming increasingly limited and supporting the view that this multi-month correction is nearing its end.

GDXJ: Juniors also posted fresh lows and are approaching the lower end of my ideal target zone. Final support comes in near $85.00 should the decline deepen. For now, I continue to watch for a reversal candle as confirmation that a meaningful bottom is forming.

SILJ: Silver juniors are trading within the target zone but are also approaching the end of the expected timing window for a cycle low. Should prices weaken further, the next and final major support level comes in near $21.00.

Conclusion

Tuesday's -0.4% CPI print and the weaker U.S. dollar should have been enough to push gold higher, reinforcing the case that a mid-year low was already in place. The fact that it didn't suggests other bearish forces remain at work and could drive prices lower before a final bottom is established.

Overall, I continue to believe the correction that began in January is approximately 95% complete and that we are approaching an important low. However, if gold fails to hold the $3,900 level through July, I will have to acknowledge the possibility of a deeper decline towards $3,500. Under that scenario, silver could temporarily fall to around $45.00.

The bigger picture remains unchanged. I view the current correction as just a pause within a multi-year bull market that should extend into 2030, with gold ultimately surpassing $10,000 and silver rising above $300. In the near term, however, bearish sentiment appears to be reaching an extreme, suggesting we are probably closer to a bottom than most investors likely expect.

AG Thorson is a registered CMT and an expert in technical analysis. For more price predictions and daily market commentary, consider subscribing at www.GoldPredict.com.

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