Latest Gold Price Forecast & Predictions
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Recapping Last week
Last week's trading saw Gold forming its bottom in Monday's session, here doing so at the 1786.90 figure. From there, a sharp rally was seen into mid-week, with the metal running up to a Wednesday high of 1824.60 - before backing slightly off the same into the weekly close.
Gold, Short-Term
From the comments made in past articles, the last key low for Gold came from the 10, 20 and 34-day cycles, which bottomed out with the July 22nd tag of the 1696.40 figure (December, 2022 contract). From that low, our outlook called for a significant short- term rally for the metal, which we have obviously seen.
From last weekend: "In terms of price, the 72-day moving average was mentioned as the ideal upside magnet - which is around 36 points above current price levels. With that, the overall assumption is that Friday's pullback will end up as countertrend, giving way to strength again - and higher highs for the move - on the next minor swing up, ideally lasting into mid-month or later."
As mentioned last weekend, the probabilities favored the most recent short-term dip to end up as a countertrend affair, with the 72-day moving average...
Gold has just witnessed a successful support test of a critical level which keeps the technical model bullish until proven otherwise. In this article, we will detail the technical test just witnessed, and what the expected outcome will be for gold as long as support continues to hold.
First a look at the support test which has just occurred within the last two weeks.
Gold Support Holds
Note the primary rising support for gold (blue line), which began exactly four years ago, at $1,180 per ounce in August 2018. This rising trend of buying pressure was tested on no less than four occasions through mid-2019, after which gold began to rise more aggressively toward its 2020 peak of $2,074 per ounce.
Markets have a way of coming back to test long-term trends, and this is exactly what gold has done over the past two weeks. Certainly expectations for a peak in the Federal Reserve’s interest rate hike cycle are already factoring into gold, as the market attempts to be forward-looking by approximately 6 – 12 months. Regardless of the reasons why, gold has bounced at a confluence of support which dates back to 2018, and thus keeps our bullish model alive.
So what is next for gold?
Gold Price Forecast
The following projection assumes that rising primary support (blue), which has now held...
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Gold Price Forecast FAQ
How do you forecast the price of gold?
Predicting gold prices can be said to be both a science and an art. For example, analysis of gold supply and demand is scientific and completely objective whereas aspects of technical and sentiment analysis of the current gold market can be more of an art as it relies on the skills and perspective of the gold analyst.
Generally speaking, when the focus of the gold forecast is longer term then analysis of the fundamentals, ie scientific analysis, comes to the fore.
For shorter-term predictions of gold prices, the price of gold in the coming weeks and perhaps few months, technical analysis of past and current gold prices, market trends, as well as current market sentiment can be more actionable predictors. Here, the fundamentals can still play a role but generally serve more as background details.
What are the key factors for long term gold forecasts?
When forecasting what may happen to the price of gold longer term, there are many things to consider including economic trends, the impact of current and expected monetary policy, QE, debt monetization, and the aggregate impact on future currency valuation.
Does the price of gold go up when the stock market goes down?
The price of gold is often negatively correlated to the stock markets. When the markets go down, gold prices usually go up. However, this is not always true. Sometimes the price of gold and stocks both go up and down in unison. Fundamental factors play an important role and need to be carefully analyzed. Historically, however, the price of gold is not tied to the fluctuations of stock and bonds. This is one of the chief reasons when one should have gold in their portfolio – to protect the long-term value of your investments.
Does the value of the US dollar predict the price of gold?
As gold is traditionally quoted in US dollars, the price of gold is negatively correlated to the strength of the USD. The weaker the US dollar, the cheaper it is to purchase gold. Therefore, if economic factors predict a strengthening of the US dollar then this will tend to drop the price of gold, and vice-versa. According to the statistics (since 1973), the long-term correlation between the U.S. dollar index and the gold prices is -0.6 so this link is quite strong.
How do US interest rates impact future gold prices?
The level of US interest rates is an important driver of future gold prices. When investing in gold, the investor is faced with the opportunity cost of gold - a non-interest bearing asset. The higher the US interest rate for holding US dollars or investing in Treasuries, the higher the opportunity cost of holding gold. It is more likely, therefore, that a rally in the price of gold will be forecasted the lower the US benchmark interest rate.