Gold's Near-term Downside Target
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
The price of gold moved considerably lower in the past several weeks, despite the pause that we saw in the final part of the previous week. The yellow metal moved below $1,300 and confirmed this move by several daily closes below it. Moreover, gold confirmed the breakdown below the rising medium-term support line that’s based on the daily closing prices of December 2016 and December 2017 lows. Consequently, gold’s likely to move lower and the question is how low can gold decline in the near term.
Before providing our reply, we’d like to emphasize that this is what seems most likely at this time, but we are not discarding other possibilities. It’s more important to stay flexible when the new developments emerge than to stick to the original gold price prediction – and we will.
Gold is likely to move to the $1,250 level or its proximity.
There was no meaningful correction from the currently-tested rising support line, which makes it more likely that the next strong support will indeed manage to generate one. After all, no market can move up or down without periodic corrections.
Why $1,250? Because of several reasons:
Summing up, gold is likely to move considerably lower this year, but since no asset can move up or down in a straight line without periodic corrections, we’ll most likely see the latter in gold along the way and the nearest corrective upswing is likely to start from about $1,250. Whether a move from this level it is going to be tradable or not is not clear at this time, but we will most likely get additional confirmations once we get closer and we’ll discuss them in the upcoming Alerts.
Please note that the above is based on the data that was available when this essay was published, and we might change our views on the market in the following weeks. If you’d like to stay updated on our thoughts on the precious metals market, please subscribe to our Gold & Silver Trading Alerts.