Gold Price Forecast – Caution is Warranted

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Published: Sep 23, 2019, 18:09 UTC

Gold held critical support near $1490 after Wednesday's Fed decision, a 1-2 week bounce is now supported. However, at 21-weeks the intermediate cycle is nearly mature, and the remaining upside is presumably limited. Our forecasting model supports an inflection point and potential top during the first week of October.

QUICK COT UPDATE: Commercials hedgers added 12,728 shorts last week for a total net-short position of -318,339 contracts. Down from the September high (-337,741) but still very elevated. That, combined with an aging cycle, suggests gold is facing a significant headwind as we head into October.

We find cycles help identify significant turning points in precious metals. The XAU mining index (chart below) has been running a 42/46 day alternating cycle. The previous cycle bottomed 36-trading days ago. A 1-2 week bounce from here would support a secondary peak during the first week of October followed by an intermediate decline into late November or early December.

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Gold may be setting up a bull trap for investors as prices test or marginally break the $1566.20 high in the coming days. Our median-term forecast calls for an eventual breakdown below $1490 and a potential backtest of the breakout area surrounding $1380.

Longer-term we believe gold recently confirmed a new bull market and the next intermediate low may become one of the last great buying opportunities.

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 https://goldpredict.com/

About the Author

AG Thorsoncontributor

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 that will begin to unravel in 2020.