Gold Forecast – Stocks Trigger Hindenburg Omen as Gold Seeks a June Low
- The Russel 2000, Nasdaq, and S&P 500 triggered Hindenburg Omens in May.
- The odds of a recession remain near 100% and could start as soon as July.
- The Annual inflation rate in Argentina exceeds 100% for the first time.
- The Fed may consider one more hike in June, which would be a huge mistake.
- Our Gold Cycle Indicator entered minimum cycle bottoming – we expect a June low.
The Hindenburg Omen is a technical indicator designed to signal the increased probability of a stock market crash. It compares the percentage of new 52-week highs to new 52-week lows. When triggered, stocks usually perform poorly but only crash about 25% of the time. The yellow circles below represent previous signals.
Recession Probability Model
The recession probability model by Bloomberg economists Anna Wong and Eliza Winger reached 100% predicting a recession starting by the end of October. Recently Anna updated her outlook on FS Insider, saying it could begin as soon as July.
Inflation in Argentina Exceeds 100%
The annual inflation rate in Argentina hit a new all-time high in April of 108.8%. This is what happens when a currency loses credibility. From an investment perspective, I’m tempted to look for real estate opportunities in Buenos Aires, but I’m afraid things could worsen before they get better.
The market is considering the potential for another Fed rate hike on June 14th. The odds for a 0.25% hike have climbed to 53%. Typically, it must rise above 80% to be taken seriously. With Core PCE coming in at 4.7%, the Fed may consider more hikes. Another rate hike would be a colossal error, in my view.
Our Gold Cycle Indicator finished at 92, and we have entered minimum cycle bottoming.
Gold Price Forecast
The Gold Cycle Indicator entered minimum cycle bottoming, and this is historically a decent time to start adding to positions. I think prices could fall further and perhaps test the 200-day MA in June before bottoming.
Silver Price Forecast
Silver is oversold, and prices are due for a bounce. Overall, I think prices could slip back to support near the 200-day MA or rising trendline before bottoming in June.
Platinum Price Forecast
Platinum closed progressively below the 50-day EMA and confirmed an intermediate-degree correction. Prices should find support around the 200-day MA in June.
Gold Miners (GDX) Price Forecast
I’m looking for a cycle low in gold miners between $28.00 and $30.00 sometime in June.
Gold is dropping into a cycle low, and how far prices fall likely depends on the odds of a June rate hike.
If the Fed announces no more hikes and goes on pause, gold should begin its next leg higher.
AG Thorson is a registered CMT and an expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more charts and regular updates, please visit here.