Gold Price Forecast: Precious Metals And Mining Update

After reaching our March $1700 target, gold entered a sharp, liquidity-driven, selloff. Prices plummeted to $1450 but have since recovered ($1642 as I write). So is the bottom in, or should we expect more selling? Our cycle work suggests more selling and a sustainable low in May or early June.

Caution Advised 

The commercial hedgers and gold manipulators are good at two things. Making money and tricking retail investors. One of their favorite tricks is to push prices back to or just above a recent high to trap breakout buyers. In this case, they may try to push gold above $1704. Once everyone has bought, then they flood the market with sell orders. I’ve seen this too many times to count, so be careful if gold approaches $1700. 

COT Update

The recent commitment of traders (COT) report shows commercial shorts have fallen to 311,823 from a record 385,612 net-shorts set in February. A decent reduction but nowhere near where I’d like to see it. A decline below 200,000 contracts seems appropriate.

Gold

Below, you’ll notice some regularity to the peaks and valleys for each cycle. The global meltdown that began in March skewed the near-term chart, but it should not abort the cycle. The typical decline into a 6-month low takes anywhere from 4 to 10-weeks before prices bottom. The recent plunge to $1450 lasted just 5-trading days, that’s way too short to be considered an intermediate-term decline. Consequently, I think it’s too early for a sustainable bottom in precious metals. My preferred timeframe remains late May to early June. 

Silver Weekly

I love silver as an investment, but I have to say, its performance has been disappointing. While gold is pressing to new multi-year highs, silver is making new multi-year lows. The good news is, prices were able to claw their way back above the $14.00 level, potentially negating the March breakdown. If silver can stay above $14.00, then the low is probably in. Collapsing back below $14.00 would support a deflationary period, and we could see new lows temporarily. 

Platinum

As with silver, the performance in platinum has been wanting. Prices are retesting the $750 breakdown level. Turning lower here would suggest a deflationary period and more downside. I still like platinum longer term.

Palladium

After collapsing 50%, palladium has rebounded nicely, which doesn’t make sense because nearly all of its demand is industrial. Unless prices take out the February high, I believe we are in the process of building a significant top.

HUI

Prices formed a swing high right at the 50/200 day crossover, the perfect stop for a top. To confirm a rebound high, prices have to close below the 185 gap. Do that, and we should at least retest the March low.

GDX

In GDX, prices need to close below the gap near $23.00 to confirm a rebound high and establish a decline back towards $16.00. 

Summary

In summary, I believe gold is in the second or third inning of a 9-inning game. Precious metals could prove to be the best performing asset class throughout the 2020s. Physical bullion is preferred. Gold miners and futures are volatile and often manipulated, so be careful. Take a long-term approach, and you’ll be fine.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit https://goldpredict.com/