Gold Price Forecast – Look for a November Breakdown

After peaking in September, gold entered a mild pullback. The correction into October seems shallow and incomplete. A shift in Fed policy on Wednesday could fuel a secondary decline and November breakdown. 
AG Thorson

COT UPDATE

The commercials added 7,082 shorts last week for a net-short position of -295,357. Typically, we see a 50% reduction in shorts before prices carve out a 6-month low. In this case, net shorts would have to drop below -170,000; the lowest we saw in October was -288,275.

GOLD CHART

After peaking in September, the pullback into the October low was very mild – not even reaching the 38% retracement level. The correction into the May 6-month low was also very gentle. Call me a contrarian, but the odds of two uncommonly shallow back-to-back corrections seem unlikely. And for that reason, I think gold may be set up to pull the rug out from under investors.

The decline into October lacked readings consistent with a 6-month low, and we saw just a 15% reduction in commercial shorts from the September high. From a technical perspective, there is little supporting a sustainable low currently.

  • Expect increased volatility surrounding Wednesday’s Fed decision. A pause in the rate-cutting (perceived, or otherwise) could send gold below the October $1465 low.
  • A decline to the 50% to 61.8% retracement level ($1381.42 – $1416.70) seems reasonable to complete the multi-week correction that began in September.

Overall, I believe gold is in a new bull market, and prices are heading much higher. For my long-term forecast please read, Gold Price Forecast for The Next Decade.

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/

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