Gold Forecast – Must Hold Bullish & Bearish Price Levels for Gold and Miners
Metals and miners continue to climb a wall of worry out of their June lows. In this update, I provide key prices levels to monitor into August. Overall, our long-term outlook remains firmly bullish.
Red Flag or Shakeout?
Some gold miners recently dipped below their June lows. Was that a red flag or a manufactured shakeout? Below are key levels I will be watching. If it was just a shakeout, then miners may be on the verge of a significant rally.
GDX DAILY: Thursday’s sharp down day in miners was either a red flag or a shakeout. A shakeout occurs as prices form a new uptrend – when bulls remain skittish. It forces weak longs to sell (puke-up) their positions just before the next rally. A close above $35.00 next week would support the shakeout theory. However, a close above $36.75 is needed to suggest a more meaningful advance.
To support a more bearish outcome, GDX needs to close progressively below $33.00 and then below $30.00.
Note- Our metals portfolios recently bought gold miners and will continue to accumulate precious metal assets moving forward.
Gold Price Scenarios and Projections
GOLD MONTHLY VALUE: With the fundamental backdrop of endless budget deficits and record-setting monetary policy. I believe there is a 70% bullish case for gold (scenarios A & B) to continue higher into 2023 and 2024. I see a 20% neutral (scenario C), suggesting gold stays below $2000 a bit longer. Lastly, I see a 10% bearish outlook (scenario D) that could allow gold to dip back to $1175.
A) Gold bottomed in March 2021 at $1673.30. The renewed uptrend supports a $3000 price target by Q2 2023. I assign a 40% probability.
B) The correction in gold extends back to the $1575 level and forms a lasting bottom. Closing above $2000 would report a $3000 target by Q2 2024. I assign a 30% probability.
C) A monthly close below $1575 would recommend a deeper correction to the bull market breakout area surrounding $1375. In this scenario, I’d expect a retest of $2000 by 2024. I assign a 20% probability.
D) Gold fails to hold $1375 and prices fall all the way back to $1175 by Q4 2024. I assign a 10% probability.
In closing, with the price of just about every commodity on the planet near new highs and trending higher, I believe it is just a matter of time before precious metals resume their bull market trends.
The only way I see gold dropping back to $1000 or lower (as some are expecting) would require a massive deflationary shock. If that occurs, then everything will collapse in value, including an 80% decline in global stock markets. Either way, it may be wise to have some physical gold for deflation and some investment gold and miners for an inflationary shock wave.
Have a safe and pleasant weekend!