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AG Thorson

As I mentioned in our previous article, gold is following the 2016 post-election price pattern. Breaking below support at $1850 established a near-term breakdown, and prices could decline even further in December. Gold could dip below $1700 before finally securing a bottom.

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The breakdown below $1850 is underway. Prices are likely to pause near the 200-day MA as bulls attempt to build a bottom. If gold continues to slide below $1800, then it could proceed towards $1750 and perhaps even $1670 before bottoming in December.


Why Is Gold Declining

Multiple pharmaceutical companies have announced positive vaccine results. Investors and institutions are becoming optimistic and are starting to see life beyond COVID-19. They are taking profits on precious metal positions and rotating into extremely undervalued sectors like energy. I became aggressively bullish on energy in October, and the XLE is up over 40% since the recent low.

Bullish Factors Supporting Gold

Gold (precious metals) will not stay low for long, in my opinion. With lockdowns resuming, unemployment claims are sure to rise. A double-dip recession is a near certainty without more stimulus. When more stimulus becomes apparent, gold will respond accordingly (rally sharply). I expect much higher gold prices in 2021 and throughout this decade. Any decline now should be considered a gift and a long-term buying opportunity.

Note- Our educational portfolio began selective buying of precious metal assets on Monday.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.

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