Gold Price Forecast: Gold's Cyclic Status And U.S. Stocks Update
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Last week's action saw gold forming its high in Monday's session, here doing so with the tag of the 1881.30 figure. From there, a sharp decline was seen into later in the week, with the metal dropping all the way down to an early-Friday low of 1776.50 - before bouncing slightly off the same to end the week. (Note: we now move to the February, 2021 contract for our new numbers).
Gold's Short-Term View
For the very short-term, the next smaller-degree low for gold is expected to come from the combination of the 10 and 20-day cycles - which is due to materialize at anytime. There is a key focus on this November 26th timeframe, plus or minus, which is our most current 'reversal date', noted in our Gold Wave Trader market report.
Shown below is the larger of these two waves, the nominal 20-day cycle component:
Once the next 10 and 20-day cycle low is set in place, then the odds will favor a rally back to the 20-day moving average or better into what is projected to be the first week or so of December. In terms of patterns, due to the configuration of the larger 72 and 154-day cycles, that move is currently anticipated to end up as a countertrend affair - with resistance at or near the upper 20-day cycle band (i.e., currently around the 1900 figure - but which is declining daily).
Stepping back then, a countertrend rally with the 10 and 20-day cycles - if seen in the next week or so - should give way to another push back to or below the lows into the mid-to-late December timeframe. At that point, we will once again be in the range for a larger-degree trough to form, which is expected to come from the combination of larger 72 and 154-day cycles, with the larger 154-day wave shown again below:
In terms of price, until a lower level materializes, gold would currently need to see a reversal back above the 1972.40 figure (February, 2021 contract) to confirm a low in place for this 154-day cycle; this number should start to drop going forward, depending on the action seen in the days/weeks ahead. In terms of time, as noted, there is now a focus on the late-December timeframe for this low to play out.
For the mid-term picture, once the larger swing down is complete, then the overall assumption is that a push back to new all-time highs will be seen on the next upward phase of the 72 and 154-day waves. However, as mentioned in past months, our ideal path is looking for an eventual push up to the open four-year cycle target to 2212.00 - 2340.56 for gold, before forming the next longer-term price peak.
U.S. Stock Market Update
The current position of the U.S. stock market (as measured by the S&P 500 index, or 'SPX') is directly opposite to that of gold. As mentioned in past articles, the last trough of significance for U.S. stocks came with the 45-day wave, bottoming with the late-October tag of the 3233.94 figure on the SPX. Here again is that 45-day wave:
Until proven otherwise, the upward phase of this 45-day wave is still deemed to be in force, with the next decent swing top expected to come from this cycle. In terms of time, the upward phase of this wave is projected higher into mid-December, plus or minus, with its next trough projected for later that month.
With the above said and noted, higher highs into mid-December (plus or minus) - if seen as expected - should set up the next peak for our 45-day cycle. From whatever high that ends up forming with this wave, the probabilities should favor a correction of about a week or so off the top, with the 35-day moving average is the downside magnet.
In terms of patterns, due to the position of the larger-degree waves, the next downward phase of the 45-day cycle is anticipated to end up as countertrend - holding above the late-October trough of 3233.94 SPX CASH. If correct, higher highs should be seen again on the next upward phase of this wave, likely lasting into the mid-January, 2021 timeframe.
That move, if seen, should eventually top our next larger wave, the 90-day cycle:
U.S. Stocks, Mid-Term Outlook
Stepping back further, the next correction phase of the above 90-day cycle would also be favored to end up as countertrend, and - if correct - should give way to the strongest rally of next year, last into what is expected to be late-Spring timeframe. That rally should be the technical setup for the next larger-degree price peak - expected to come from the bigger 360-day cycle, shown below:
This 360-day cycle last bottomed back in March of this year, and with that is seen as 174 trading days along - and is currently regarded as bullish into what looks to be late-Spring of 2021. In terms of price, there is an open upside target for this cycle to the 3812.56 - 3960.44 SPX CASH region, which is expected to be met in the weeks/months ahead.
Stepping back, the upper-end of our 360-day target zone (i.e., 3960 SPX CASH, plus or minus) will also act as major resistance to the upward phase of this wave - particularly if tested around late-Spring. Going further, the next larger peak should come from this same wave, which would be expected to see a sharp drop back to the 360-day moving average in the months to follow.
In terms of patterns, however, due to the bullish configuration of the larger four-year cycle - which also bottomed back in March - the probabilities should favor the next downward phase of this 360-day cycle to end up as countertrend. Here again is that four-year cycle for U.S. stocks:
With the above said and noted, the next downward phase of the 360-day cycle could find support around the aforementioned 360-day moving average (plus or minus). If correct, the next upward phase would be expected to give way to higher highs into what looks to be the Spring, 2022 timeframe or later, before attempting the next four-year cycle top. More on all as we continue to move forward.
Jim Curry
The Gold Wave Trader
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