Updated Gold Price Forecast

Back in December we outlined what we thought it would take for gold to form a bottom and start its long awaited ascent. We’re seeing several encouraging signs that the bottom may be taking hold.

The big issue for gold of late is the strength of the U.S. dollar (USD). We shared this chart last month which shows how gold has been consistently moving in the opposite direction of USD for the past year.

In the past couple of weeks, the U.S. dollar has finally started to reverse its climb and, sure enough, gold has been heading straight up.

Another strong indicator gold may be kicking off a sustainable long-term uptrend is that the big boys appear to be getting on board. It’s been very encouraging to see that even during the rise in the price of gold over the past few weeks, the commercial hedgers have continued to be buyers of gold.

It’s still very early in the gold-rally game. We weren’t really expecting a top in USD until late January to early February. We still could see one more burst higher for USD before it has a more sustained fall back to earth.

The time-cycles on gold suggest that we could see a final drop lower for gold in late February before gold rallies through 2017.

Overall, however, we’re very encouraged by the signs we’re seeing for gold. It tells me that my core thesis is intact and the train is on the tracks. We have been dipping my toes into new gold investments to make sure that we don’t get left behind should the rally happen a little sooner than we are expecting.

We’ll continue to watch the U.S. dollar and the buying patterns of the commercial players in the gold market as we plot our own strategy for benefiting from a sustained rally in the price of gold.

Have a golden weekend,

TradeSmith Research Team