Gold closed last week, and last month for that matter, well above key support, which stands at the $1,245 level.
Closing above that level on both a weekly and monthly time frame is technically bullish for the yellow metal, but caution is still advised.
Gold continues to trade in a relatively tight trading range between roughly $1,200 and $1,300, mostly driven by the movement in the dollar. So we have to keep a close eye on the dollar to predict the next major move for gold.
The Edelson Institute Cycle Forecast Chart on gold still shows that we are near a temporary low in gold and that we should see a sizable rally heading into the middle of the fall.
However, there will be plenty of upswings and downswings, so you must be nimble with your trading.
As you can clearly see in the chart above, our cycle models have gold making a temporary low in the next week or so before it rebounds to the upside over the next several months, but with a healthy dose of volatility along the way.
As I have warned many times before, patience is required when dealing with the gold market as we have not yet elected any of our major long-term buy signals, but we are getting closer.
Gold will rally only when investors begin to see that the financial system is failing and they lose complete and total confidence in government debt. That is when you will see gold finally breakout to new highs and head toward my target of $5,000 an ounce. We are inching closer and closer to that day of reckoning.
Plus, increasing stress in the global macroeconomic environment should remain a positive driver for gold prices over the rest of the year and probably beyond.
Rising U.S. interest rates will remain in place for the foreseeable future. But the speed at which the Fed moves toward a ‘normal’ policy will continue to be slower, and most likely, not any faster than markets are already pricing in.
Plus, there remain plenty of political and economic risks, including:
- The ongoing challenges of Trump’s tax plan/economic initiatives;
- Tensions in the Middle East as well as the Korean peninsula;
- The outcome of Brexit negotiations, plus multiple elections in Europe.
So, at the very least, while these and various other political and economic issues continue to bubble to the surface, we should continue to see safe-haven money flowing into gold. That’s when I would recommend looking to accumulate on dips.
In fact, gold, silver and mining stocks are just now getting warmed up for much bigger gains in the years to come, and the buying opportunity of a lifetime in gold awaits patient investors in the near future.