Gold Outlook: Recent Cycle Lows Point to More Upside, Particularly for Miners

Metals and miners saw a significant rally on Thursday, signaling the possibility of a cycle low. A strong close to the week would further support a bullish outlook.

Miners experienced a sharp gap up, suggesting that prices may have bottomed in the final days of December. For continued momentum, it's crucial to see follow-through, with key resistance in GDX at $37.30.

There is potential for a "slingshot" move higher in miners, similar to a V-bottom, where prices surge with nearly the same intensity as the previous decline. While the likelihood of this scenario is around 10%, it could rise to 30% if GDX breaks above $37.30 by mid-January.

US DOLLAR: The dollar jumped above 109, and I'm shocked it didn't affect gold more. Divergent price action in the opening days of a new year is not uncommon. If it continues through 110, I'd be surprised if gold continues higher.

GOLD: Gold closed above last week's swing high ($2655.70), and I see the potential for a bottom. Because prices stayed above the November low, the odds of a triangle pattern increased. I'd like to see a couple of closes above $2,675 to solidify a bottom.

SILVER: Silver held above $29.00, and I see the potential for a cycle low. Prices must close progressively above the 50-day EMA (currently $31.00) to confirm a bottom.

PLATINUM: Thursday's bullish engulfing candle supports a potential low in platinum. Prices need to close progressively above the 50-day EMA to confirm.

GDX: Miners started the year with a strong up gap, and I think we may have a cycle low at $33.42. A daily close below the $33.90 gap would nullify the potential for a bottom.

Miners are bouncing from their December low, and the key level to watch is $37.30. Progressive closes above that level would promote more upside, whereas failing to recapture that level in January would open the door to more consolidation.

Note: I see the potential for a slingshot move to the upside. Those odds will increase if prices close progressively above $37.30 quickly.

GDXJ: Juniors gapped higher, and I think we have a low at $41.85. Closing below Thursday's gap ($42.50) would open the potential for more downside. Progressive closes above $48.00 would be bullish, supporting more upside.

SILJ: Silver juniors reversed sharply, and I think we reached a bottom at $9.72. I see stiff resistance at $11.20, which could prove challenging. Progressive closes above $11.80 would encourage more upside.

NEM: I like the potential for a bottom in Newmont as long as prices don't close below the $37.20 price gap. The breakdown from October did tremendous technical damage, and prices would have to get back above the 200-day MA (currently $44.50) to signal more upside.

GOLD: I like the potential for a bottom in Barrick as long as prices don't close below the $15.50 price gap. Prices must get back above the 200-day MA to reverse the December breakdown.

NAK: Northern Dynasty Minerals surged nearly 17% Thursday, signaling a potential breakout from a well-formed, rounded bottom pattern. While I was bullish on them in 2019, the company has been poorly managed and has faced several permitting challenges. However, they control the world's largest undeveloped copper and gold deposit (in Alaska). The site contains around 57 billion pounds of copper, 71 million ounces of gold, 3.4 billion pounds of molybdenum, plus smaller quantities of silver and rhenium.

This stock has been a terrible disappointment, and I don't expect that to change, but the recent price action is interesting. Perhaps the Trump administration will be able to get them the necessary permits. I have a small position in my wife's portfolio that I'll keep in case it takes off. To signal a major breakout, prices would have to rally above $3.00, which is a long way off.

Conclusion

Gold is expected to hit new record highs in 2025, and this could be the year that miners and silver play catch-up. Looking further ahead, I anticipate gold reaching $8,000 to $10,000 by the end of the decade. Silver, on the other hand, could easily surpass $100, with even more ambitious targets in sight. I'll be keeping a close eye on miners this January, as they may be poised for a sharp upward movement.

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