Gold was in great shape a few months ago. After an epic breakout above the stubborn 6-year bear market wall at 1375 USD gold was able to break through it. This certainly marked a pivot point. Gold Entered A New Bull Market Right Before Its 8th Bear Market Anniversary is what we wrote back in May. Right now gold is struggling, and that’s ‘normal’ because this is just the start of a new bull market. Starting up takes time, while accelerating happens late into a bull market. When gold was bullish this summer many were predicting gold to rise to 2,000 USD in 2020. But how realistic is this? We would say NO, this is not realistic. Gold will not rise to 2,000 USD in 2020 but a few years after 2020. That’s also what we wrote in our Silver Price Forecast For 2020, and it will not be any different for gold.
Let’s revise how things have gone this year for gold.
First, everyone was bearish on gold. Early this year there was hardly any gold bull on this planet. We saw gold attempting to break out in February, but it eventually failed.
With the next breakout attempt though we became bullish beforehand, and were on record on MarketWatch (gold article) as well as Barron’s (gold article) making the point that gold would rise to 1,550 USD. That’s when gold was trading below $1,300 USD. There was no sign of many gold bulls back then.
Once gold started breaking out things changed fast. Suddenly the world was full of gold bulls. Many even started talking about gold’s price rising to 2,000 USD still before 2020.
Gold prices could reach $2,000 by the end of the year, strategist says (July, CNBC)
Gold price could smash records at $2,000, says Citi (September, FT.com)
These are just two examples, there were many more.
It’s not because InvestingHaven said their gold forecast was 1,550 USD that the market stopped gold’s rise cold right at that level.
But the reality is that our indicators suggested the rally was reaching overbought levels. This indeed suggested there would be no way that gold would rise to 2,000 USD still in 2019.
We believe though that gold will come close to testing 2,000 USD in 2020 even though our best price forecast is $1,800 for 2020.
If anything the weekly chart is one that helps us understand the gold’s market behavior. Look at the green circles on the first chart. There was +1y between those bottoms. The likelihood of the next bottom being hit in 2020 is high, and the subsequent rise might be similar to the one we saw earlier this year.
What gold bulls absolutely want to see is the next bottom being hit above the horizontal purple line. Above that 1,375 USD level is the bullish area. It will be a condition for gold to rise close to 2,000 USD in 2020, even though we don’t expect it to test it already in 2020.
The other indicator we keep a close eye on is gold’s COT report.
We want to see long positions of non-commercial traders decrease as gold’s price retraces. It will provide the bullish energy for gold to rise again, and to move closer to the magic price of 2,000 USD in 2020 or beyond.
