Gold: Recovery Pattern Has Failed

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Gold’s bottoming attempt following the 2015 low of $1,045 per ounce has failed to maintain a price structure indicative of a rising trend. Consequently, the odds have now shifted significantly that precious metals will not be in a bull market for the foreseeable future. This does not mean that the price of gold is going to crash, nor that an investment in the precious metals sector may not be wise given one’s unique situation. However, with the recent trend failure the highest-probability is that the 2016 peak of $1,378 per ounce will not be overcome for gold for at least the next several years.

Let us examine the current price trajectory and some ramifications.

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Gold — Short Term Recovery, Long-Term Caution

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The short-term forecast for gold is clear: the metal is set to move higher. Gold has just put in an intermediate low at $1,238 per ounce as of July 3, 2018. Several leading indicators point to an imminent recovery in prices over the next 1-3 months.

However, the longer-term picture for the precious metal is mixed: gold must overcome its 2016 high at $1,378 within the next six months to avoid a significantly bearish outcome that could result in a multi-year decline following such a failure.

The time to closely monitor gold’s price action for one of these scenarios is now.

 

 

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Gold Price Forecast: Recovery Pattern Must Be Maintained

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Gold is in a primary recovery pattern as it attempts to break above its 2016 peak of $1,378 per ounce. This recovery pattern appears over and over again throughout history – the success or failure of gold to maintain the structure of this pattern will pave the way for either a massive multi-year advance higher in the sector, or a grinding decline to last for the majority of the next decade.

We will have the answer to the question of which outcome to expect within the next 12-18 months.

It will behoove precious metals investors to pay close attention to the technical action and to tune out misleading rhetoric coming from both perma-bulls and perma-bears of gold and the precious metals sector.

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