Gold market analysis and predictions: Up or Down

Gold market analysis and predictions

Gold market analysis and predictions

Updated March 2023

Experts often rely on patterns to predict market outcomes. Still, there is no guarantee that any pattern will work going forward, as free markets no longer exist due to the Fed’s consistent implementation of QE. While a pattern could lead to a big move in Gold, the focus should be on what is currently happening in the market.

In 2011, many signs suggested that all was not well in the Gold market. Key technical indicators were issuing negative divergence signals, the dollar was generating strong signals of an impending bottom, and many in the Gold market were issuing overly optimistic targets. As a result, we advised our clients to close their bullion positions and embrace the dollar, which proved to be a wise decision.

 Gold Market Analysis and Predictions: What’s Next

From 2011 until today, gold experts have repeatedly prophesied a bottom that never materializes. They have been disconnected from reality and have clung to the illusion that the Fed’s printing of more money would automatically cause gold to soar to new heights. If this were true, gold would already be trading north of $3,500.

Since its inception, gold’s primary, albeit indirect, function was to destroy the dollar. What’s different today is that the Fed has decided to intensify the process. It is essential to recognize that gold, like any other market, needs to release some steam. As it underwent a strong run-up, it was natural to anticipate that it, like any different market, would eventually experience a significant correction. During the market selloff in August, gold’s performance was rather dismal, as observed in the following statement.

How do things stack up now?

The current downside risk for Gold is quite limited as it has already undergone a significant correction. Shorting Gold at this stage would be unwise due to the unfavourable risk-to-reward ratio.

Despite some contrarians and Elliot wavers predicting a dramatic rebound, we remain cautious and do not share their optimistic outlook. While we would like to see a turnaround, we cannot rely on illusions becoming a reality. However, we believe the potential downside is limited from here and recommend long-term investors consider deploying some capital into bullion. We anticipate that Gold will trade considerably higher three years from now.

 Gold: A hedge against unforeseen events

Well, let’s talk about Gold market analysis and predictions, shall we? Many a learned fellow out there is waxing poetic about the latest patterns and trends, but let me tell you, dear reader, relying on such practices can be a bit of a fool’s errand. A pattern that once worked like a charm may well be worth less than a hill of beans in the present day.

Truth be told, there are no guarantees in this here market game, not since the Fed started with their QE shenanigans. But don’t you go fretting none over patterns and possibilities, for I’m here to talk to you about what’s happening in the gold market?

In ’02, we were bullish on gold, and that sentiment stayed strong until the dawn of ’11. But then we started hearing some rumblings that all was not well in the gold camp. Technical indicators were giving off some negative signals, the dollar looked ready to make a comeback, and everyone and their dog was getting too excited about gold for our liking. We warned our clients to cut their bullion positions and embrace the dollar; lo and behold, it was the right call.

You got to be in it to win it.

But since then, we’ve seen a whole lot of folks still holding out hope for a gold resurgence, even though the reality ain’t matching up to their dreams. They keep on preaching about the Fed printing more money and how gold’s bound to hit new highs any day now, but if that were true, we’d be seeing gold trading north of $3,500 already.

The fact is, gold’s just like any other market, and it needs to blow off some steam every now and then. And after that strong run-up, it was only natural that we’d see a correction. But now that it’s had a chance to cool down, the downside risk is looking somewhat limited. Shorting gold at these levels will be a real fool’s errand if you ask me.

Sure, you got some contrarians out there calling for a turnaround, but we ain’t singing that tune. We think the downside action is limited, and if you’re a long-term investor, putting some money into gold bullion isn’t a bad idea. But don’t expect any miracles in the short term. Look at it like you’re taking out an insurance policy against some possible future event. We’re in the midst of a currency war, folks, and another currency crisis is bound to come knocking sooner or later.

Contrarians continue to Chant.

Now, some folks like to paint a picture of doom and gloom, like the end of the world is just around the corner. But that’s a bunch of hogwash if you ask me. We’ve weathered plenty of storms before and will endure plenty more in the future. It’s all about seizing the opportunities that come with these crises instead of hiding in a bunker and waiting for the end to come.

So, my advice to you is this: when the opportunity comes knocking, be ready to grab it by the horns instead of turning up your nose and slamming the door in its face. And when you take out an insurance policy, you ain’t doing it because you’re sure the house will burn down. You’re doing it so you’re protected, just in case it does.

Gold market analysis and predictions: 2023


Investors note that owning gold in 2023 looks like a smart move. The dollar is expected to hit a long-term top, while gold is gaining momentum and set to trade higher. While the dollar may reach new heights in the short term, it’s likely to decline for years to come. On the other hand, gold is expected to trade in the range of $2,500 to $2,900, with a possible overshoot to $3,600 before a multi-month top takes hold.

Investors should consider deploying new capital into long positions during sharp pullbacks, focusing on blue-chip gold stocks and bullion to exploit this potential. This way, they can benefit from the upside potential in gold while hedging against market volatility. With a potential currency crisis, owning gold could be a valuable form of insurance in your investment portfolio.

Random Stock market reflections 2023

Contrarians, driven by their unique perspective, often experience bouts of nervousness as they continuously monitor their positions, seeking confirmation that the market has hit its lowest point. However, once the sector begins to rally and generate returns, their nervousness dissipates, and they transition into a state of extreme bullishness—a phase known as euphoria. This is where mass psychology comes into play. It is crucial for astute investors to recognize this shift and take appropriate action. While it may not be possible to sell at the absolute peak, exiting the market at this stage can bring one remarkably close to it.

Understanding mass psychology is an integral component of a successful trading system. Recognizing the collective emotions and behaviours that drive market trends provides valuable insights for making informed investment decisions.

Another key aspect is mastering multiple Technical Analysis (TA) tools and avoiding their standardized use. By embracing the principle that each tool offers subjective interpretations, traders can harness their flexibility and adaptability. This allows for a more nuanced understanding of market dynamics and enhances the effectiveness of TA in decision-making.

Furthermore, patience and discipline are essential traits for traders to cultivate. Recognize that there may be periods where one must wait for months before entering a position. However, exercising patience can yield substantial rewards in a matter of weeks. The ability to withstand the waiting game while adhering to a disciplined approach is crucial for long-term success in trading.

In summary, unravelling the phases of contrarian behaviour, understanding mass psychology, utilizing TA tools subjectively, and cultivating patience and discipline form a solid foundation for success in the dynamic world of trading.

Originally published on September 23, 2015, this article has undergone multiple updates over the years, with the most recent update in March 2023


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