With gold breaking out this week as I had been anticipating all summer, I put together a video presentation explaining why the metal is now likely to surge to at least $4,400 an ounce. In it, I also cover the powerful long-term fundamentals that point to an eventual rise to at least $15,000 over the next 5 to 10 years.
While the video presentation above contains my full technical and fundamental thesis, I've also included a brief written summary below.
My $4,400 gold price target is derived from the technical analysis concept known as a measured move. I created the diagram below to illustrate how measured moves work. It begins with an initial impulse move—such as the $500 advance shown in the example.
After that surge, the market or asset pauses to consolidate its gains. This consolidation phase can take various forms, such as a sideways trading range or a triangle pattern. Once the consolidation is complete, the asset breaks out and resumes its rally, typically rising by an amount equal to the initial move—in this case, another $500. It's a straightforward concept, but a powerful one.
Now let's take a closer look at the triangle pattern that formed in gold this past summer and see how high it could rally using the measured move principle. The rally from January to April, which led into the current consolidation, was $900 per ounce.
According to this method, the breakout from the triangle would likely produce a similar $900 move—bringing gold to an impressive target of approximately $4,400, representing a very respectable 28% gain. It's also worth noting that both JPMorgan and Goldman Sachs expect gold to reach $4,000 by 2026, so the $4,400 target is hardly far-fetched.
To summarize, measured moves provide a useful rule of thumb for setting price targets after breakouts from consolidation patterns such as the triangle that formed in gold this past summer. While they are more of a rough guideline than a precise forecast, I have seen enough of these setups hit almost exactly to the dollar that I have developed strong respect for their reliability. Beyond the technicals, gold's fundamentals reinforce the case, with a weakening U.S. economy and a softening labor market setting the stage for another round of Fed Funds rate cuts, which would be bullish for gold.
