(Kitco News) - Gold's $300 rally since November is just the start of a bigger move, but one market analyst is warning investors not to chase the market as prices are overstretched and due for a correction.
In an interview with Kitco News, Carley Garner, co-founder of the brokerage firm DeCarley Trading, said that she is looking for gold to eventually break through to all-time highs above $2,100 an ounce this year.
She added that after $2,100, the next major resistance point would be around $2,600, an extension of a long-term trend line from 2016. But she said that gold isn't hitting record highs overnight.
"It's rare that gold takes off without a correction," she said. "Gold can be a very difficult market to trade and can really punish traders who become complacent."
In the near term, Garner said that she would not be surprised to see a correction take gold prices back to $1,800 an ounce.
"That would be healthy," she said. "I think a lot of people who missed this rally are waiting for a pullback."
A significant reason behind Garner's call for a correction is that many investors gave up on the precious metal following last year's disappointing performance as inflation rose to a 40-year high.
"At the end of the year, nobody was watching gold, nobody was talking about it, but this rally is starting to gain some attention," she said. "At some point, gold will be a major talking point and that is when we see prices push higher."
Along with gold prices hitting resistance just above $1,940 an ounce, Garner noted that the U.S. dollar is also finding support with the U.S. dollar index trading just below 102.
Garner said next week's Federal Reserve monetary policy decision could provide some short-term bullish momentum for the dollar, which would weigh on gold. However, she added that long-term the Fed is closer to ending its tightening cycle, which could ultimately push the U.S. dollar index back down to around 90 points.
"All markets, except for the U.S. dollar, have given back all their gains that resulted from the chaos of 2022," she said. "I think we are on the cusp of the U.S. dollar's bull market turning into a bear market."
Another bullish factor for gold has been last year’s chaos in the crypto market. In a recent comment on Twitter, Garner said she thinks Bitcoin is going to zero.
|
| This is why gold is outperforming silver - MKS |
"Bitcoin could continue to go higher, but it's not worth it," she said. "I think investors are tired of all the volatility and are ready to put their money to work in more traditional assets."
After seeing the reaction (read the comments) to this analysis (which happens to be mine), I'd like to revise my analysis...Bitcoin is going to zero. https://t.co/IgSZBxeND9
— DeCarleyTrading.com (@carleygarner) January 24, 2023
As to what gold investors can expect in the price action in the near term, Garner said they should look at silver. Garner is also bullish on silver but said she is not ruling out a correction, taking the price back to $20 an ounce.
However, long term, she sees silver prices pushing in the low $30 range, potentially going as high as $36 an ounce if it has enough momentum.
"I'm looking at it at silver as a bit of a bellwether because it has both industrial and precious metals properties. It's lagging both copper and gold. To me, that is a red flag that maybe, the metals markets in general, including copper and gold, are due for a little bit of a pullback before we resume the rally," she said.
