Gold Price Forecast - The Upcoming Gold Move And Its Similarity To March 2020

In our latest Gold Forecast called The Upcoming Gold Move and Its Euro Signal, we looked into the yellow metal from the Old Continent’s point of view. In today’s article, we’ll focus on the most popular gold ETF, the GLD.

Let’s take a look at what happened over there yesterday.

We previously commented on the above chart in the following way:

This makes that situation even more similar to what happened in early March. Back then, the GLD ETF also made a new high in terms of the closing prices… And it was the final time to exit any remaining long positions and enter short ones.

Please note that the double-top itself is not the only similar thing. The shape of the decline from the first top (zigzag marked with red) and the shape of the second top (dome) also confirm the similarity.

This, plus the fact that based on the last few days, it seems that gold topped right at its vertex-based reversal, makes the outlook very bearish.

Now, while gold futures declined [on Wednesday], the GLD ETF closed a bit higher. Does this invalidate the above-mentioned analogy? Not really. On March 11^th, GLD moved slightly above the previous day’s close and then declined during the day. Why would it matter? Because it shows the back and forth movement before the biggest part of the decline. This time, gold is trading a bit differently in terms of the closing prices, but the overall pause within the short-term decline is present – just like it was present in March. What we saw, could be just the calm before the storm.

Now, based on what we saw yesterday and what we see so far in today’s pre-market trading (gold is down by about 1%), it seems that the similarity to early March is still present. Moreover, it seems that what we see now are just hours before the decline accelerates. In fact, it seems that this acceleration is already taking place.

Summary

The uncanny similarity to the early March setup shows, that it’s likely that the yellow metal will still take it on the chin, initially. Today’s premarket trading points in the direction of the downside to accelerate – to the surprise of those on the long side.

The following days are not likely to be pleasant times for anyone who refuses to jump on the bullish bandwagon just because prices moved higher in the previous months. But what’s profitable is rarely the thing that feels good initially. As silver often moves in close relation to the king of metals, forecasting gold’s rally without a bigger decline first is thus likely to be misleading. The times when gold is trading well above the 2011 highs will come, but they are unlikely to be seen without being preceded by a sharp drop first.

Naturally, the above is up-to-date at the moment of publishing and the situation may – and is likely to – change in the future. If you’d like to receive follow-ups to the above analysis, we invite you to sign up to our gold newsletter. You’ll receive our articles for free and if you don’t like them, you can unsubscribe in just a few seconds. Sign up today.

Przemyslaw Radomski, CFA

Editor-in-chief, Gold & Silver Fund Manager

Sunshine Profits - Effective Investments through Diligence and Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.