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Gold and silver are approaching critical support levels, and I believe the final shakeout is underway.
The current correction closely resembles the 2022 midterm election pattern, when gold established a major bottom just days before voters went to the polls. With sentiment extremely bearish and next week’s elections approaching, a significant turning point could be near.
- Gold’s 2022 Pattern: Gold is following a remarkably similar correction to 2022, suggesting a major bottom could form within days.
- Metals and Miners: Gold, silver, and mining stocks are approaching critical support levels that could mark the end of the correction.
- Election Wild Card: Next week’s election results could trigger an immediate reversal or extend the selloff into December, potentially pushing gold toward $3,500.
Gold 2022 vs. 2026
Gold experienced a similar correction in 2022, which was also a midterm election year. Prices peaked in the first quarter, established an initial low in July, rallied into August, and then formed a final bottom just days before the November elections. The current setup closely resembles that pattern, suggesting gold could bottom any day now.
Gold futures trade near $3,919, with the...
As mentioned in my articles from mid-Summer, Gold was forming a key swing top - expected to come from at least one of the cycles that we track. Since the mid-August top, Gold has fallen nearly 600 points into the most recent low, and with that is still looking for its next trough - which is due to form soon.
Gold's 34-Day Cycle
As mentioned back in August, a sharp correction was expected to play out for Gold, with that decline coming as the result of our 34-day time cycle, shown below:
Back in August, Gold was extended above its 34-day moving average, which set the metal up for a sharp decline phase. This again is due to the fact that a dominant cycle will revert back to a moving average of the same length, approximately 85-90% of the time.
Going further, the downward phase of this 34-day cycle was later confirmed to be in force in our Gold Wave Trader...
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Gold Price Forecast FAQ
How do you forecast the price of gold?
Predicting gold prices can be said to be both a science and an art. For example, analysis of gold supply and demand is scientific and completely objective whereas aspects of technical and sentiment analysis of the current gold market can be more of an art as it relies on the skills and perspective of the gold analyst.
Generally speaking, when the focus of the gold forecast is longer term then analysis of the fundamentals, ie scientific analysis, comes to the fore.
For shorter-term predictions of gold prices, the price of gold in the coming weeks and perhaps few months, technical analysis of past and current gold prices, market trends, as well as current market sentiment can be more actionable predictors. Here, the fundamentals can still play a role but generally serve more as background details.
What are the key factors for long term gold forecasts?
When forecasting what may happen to the price of gold longer term, there are many things to consider including economic trends, the impact of current and expected monetary policy, QE, debt monetization, and the aggregate impact on future currency valuation.
Does the price of gold go up when the stock market goes down?
The price of gold is often negatively correlated to the stock markets. When the markets go down, gold prices usually go up. However, this is not always true. Sometimes the price of gold and stocks both go up and down in unison. Fundamental factors play an important role and need to be carefully analyzed. Historically, however, the price of gold is not tied to the fluctuations of stock and bonds. This is one of the chief reasons when one should have gold in their portfolio – to protect the long-term value of your investments.
Does the value of the US dollar predict the price of gold?
As gold is traditionally quoted in US dollars, the price of gold is negatively correlated to the strength of the USD. The weaker the US dollar, the cheaper it is to purchase gold. Therefore, if economic factors predict a strengthening of the US dollar then this will tend to drop the price of gold, and vice-versa. According to the statistics (since 1973), the long-term correlation between the U.S. dollar index and the gold prices is -0.6 so this link is quite strong.
How do US interest rates impact future gold prices?
The level of US interest rates is an important driver of future gold prices. When investing in gold, the investor is faced with the opportunity cost of gold - a non-interest bearing asset. The higher the US interest rate for holding US dollars or investing in Treasuries, the higher the opportunity cost of holding gold. It is more likely, therefore, that a rally in the price of gold will be forecasted the lower the US benchmark interest rate.