A Gold Price Forecast For 2020 And 2021

We consider our annual gold price forecast one of those important forecasts because of our track record in forecasting gold prices. It is clear that both gold and silver started a new bull market. One thing that most forecasters or analysts really miss is a sense of how markets tend to work. A bull market starts slowly and picks up in speed over time. So this an early stage bull market in precious metals, and our gold price forecast reflects a slow start in 2020 with first signs of picking up speed in 2021. We predict gold’s price could rise to $1,750/oz in 2020, and $1925/oz in 2021. The prerequisite is that gold’s COT report shows signs of a bull market, that the US Dollar is not too bullish (neutral to bearish at times) and especially 20 year Treasury rates show declines from time to time. Our 2020 forecast for gold is mildly bullish while our 2021 forecast is wildly bullish with a big spike. 

We want to point out, before looking into the details of our gold price forecast, that we are no perma bulls nor perma bears. We have a bullish forecast for gold and silver (read our silver price forecast here) because we see a bull market, underpinned by market conditions. A few years ago however we forecasted a bear market in gold and silver, and our prediction was accurate!

As per our 100 investing tips:

 Markets move in cycles. Each market has its own characteristics, and the periods in which a market rallies is a minority of time. The key is to be in a market right at the start of a major move. However, a minority of investors is able to do so as the majority gets sucked in towards the end of a big move (when it’s almost too late).

When it comes to gold now is the time to accumulate positions by buying the dips for the long term. That’s the strategy that comes out of this gold price forecast for 2020 and beyond 2021.

Why This Gold Price Prediction?

We are here to catch those major moves in gold, and our gold forecast should guide us with this.

We are on the lookout of markets that become a multi bagger in 6 to 9 months time. It is our official mission, formalized at the start of 2020. We call it our Mission 2026, and we even have a target for this: we want to turn $10k into $1M the latest in 2026 by having the best forecasts and associated trades.

That’s the reason why we spend so much time researching and writing our annual forecasts, first and foremost our annual gold price prediction.

This gold prediction suggests that (1) a new bull market in gold and silver has started with the June 2019 breakout in gold as explained in Gold Enters New Bull Market Right Before Its 8th Bear Market Anniversary (2) this bull market is here to stay for several years.

All this implies that ‘buy the dip’ is the best strategy going forward, both for playing the gold as well as the silver market. There will be one or two rallies per year going forward. Those are the ones we want to catch. We recommend readers to sign up to our free newsletter to follow our work and try to catch those gold rallies in 2020 and beyond 2021.

Our Gold Price Forecast for 2020 and 2021

Let’s start with the conclusions of our gold price forecast for 2020 and 2021: gold is a new bull market.

Based on the long term charts which show gold’s dominant patterns we expect this new bull market to continue for several years.

InvestingHaven’s research team strongly believes that gold’s dominant trend is this 8-year rounding formation after hitting all-time highs. The bottom of this rounding pattern was reached after 5 years so we expect some 4 to 5 years before gold is able to break out to all-time highs. Consequently we will see a formation of higher lows in 2020 and 2021.

Bull markets accelerate slowly over time, only to accelerate as they mature. With that in mind we predict several spikes in the 2020 and 2021, and in 2021 we expect the first but unsuccessful test of former all-time highs. It might take a year or two before a definite breakout above gold’s former highs at $2,000 is a fact.

All this assumes no exceptional circumstances like sudden but wild inflation.

We look at leading indicators in the COT report and inflation indicators to get a sense of the timing of the spikes in 2020 and 2021.

Our Gold Price Forecast for 2020 and 2021

Based on the leading indicators and gold’s chart setup we see the following gold price forecast for 2020 and 2021.

Gold Price Forecast Now Underway (edit: Jan 3d, 2020)

Ed. note: This is paragraph (only) was added on Januardy 3d, 2020.

Today, right at the start of the 2nd trading day of 2020 we get a confirmation of our bullish gold forecast written many monts ago.

Whether gold is rising because of political tensions is besides the point. The point is that gold is rising, and was already on the rise (hint: markets make the news, not the other way around).

This bullish scenario might make the gold market the most attractive market in the first months of 2020! We identified the bullish breakout level to be 1530 USD. Last night, gold convincingly crossed this level and now trades in a higher area of this new rising channel.

We believe the grey channel on below short term gold chart will be the dominant pattern for the first months of 2020. This is pretty bullish. It also points to a gold price target of $1,715 which comes very close to the projected $1,750 for 2020 which we forecasted many months ago.

Interestingly gold and silver miners did break out already a few weeks ago. However they seem not to be following the metals prices, at least they do so partially. It will be interesting to see what happens with precious metals miners if bullion prices continue to be strongly bullish as they are at the start of 2020.

Ed. note: Sign up to our ‘momentum investing’ premium service to known when we believe it is time for gold and/or silver trades.

Leading Indicators for our Gold Price Predictions

We have been successful forecasting gold prices in recent years.

To illustrate this we go back to September of 2015. Back then our gold price forecast was published in this MarketWatch gold article. The set of circumstances drove gold lower, exactly as predicted.

In May of 2019 however we were very vocal and convinced about a gold price breakout, and said so in Why gold’s a ‘bargain’ at less than $1,300 an ounce which was published on MarketWatch. Also Barron’s picked up our forecast, and featured it on the same day: How Gold Could Stage a 20% Rally This Year.

The reason why those gold price predictions were proven accurate is because gold has a number of reliable leading indicators.

First of all gold’s futures market COT report helps understand extremes and price levels that may act as turning points. This is not exact science, and yes there is lots of manipulation in this space.

Regardless the COT report has helped understand when the price of gold has or hasn’t upside potential (similar to its downside potential).

Second there is the the inverted Dollar as well as inverted Treasury rates correlations.

The USD has a negative directional correlation indicator with gold’s price. This means that is helps understand secular trends (not day-to-day trends).

Similarly, the inverted correlation between gold’s price and 20 year Treasuries suggests directionally where gold’s price is headed.

We look at all those leading indicators, combine it with gold’s chart patterns, and use this as the input for our gold price prediction. In other words we don’t look at gold news as a leading indicator nor at gold research for gold investors.

Leading Indicator: Gold COT

The way to understand this indicator is that it signals a bottom or top when hedge funds have extremely low or high positions. The shape of the subsequent change in net positions is what helps understand whether there is a bull market or bear market in the price of gold.

When it comes to the gold COT report we look at extreme net positions of non commercials. Every time non commercials are approx. 300,000 contracts net long it tends to signal a major peak in gold’s price.

That’s the same level we see at the time of writing. This indicator has to come down in other words.

When it comes to interpreting what it means for the big picture trend when gold’s price turns up we have to look at the level of net long contracts by non commercials. There are 2 potential scenarios, each with an important implication:

1. Either net long positions of non commercials drop close to zero before the price turns up. This is a sign of a gold bear market.
2. Either net long positions of non commercials remain significantly positive before the price turns up. This is a sign of a gold bull market.

Everything we explained in this section should be reflected in the center panel of the first chart.

Leading Indicator: Gold to Dollar inverted directional correlation

The 2nd leading indicator for gold’s future price is the Dollar inverted correlation.

The next chart shows the Dollar in light grey, but it is inverted. The price of gold is reflected in black.

In the last 2 decades the gold price chart has tracked the inverted price of the Dollar with just 3 exceptions (2010, 2012/2013 and 2019). Those exceptions only tended to last 6 to 15 months.

Now one may argue that the divergences are substantial, and it would question the validity of this gold price forecast leading indicator.

However, we have to look carefully at the ‘events’ that took place when these divergences took place. In particular gold and the USD are not correlated during major events: a major rally in gold (2010), a major breakdown in gold (2013) or a major breakout (2019).

In other words gold and the USD are negatively correlated (which we already knew) but only directionally (not per se in the short to medium term). When disruptive ‘events’ take place (a major breakdown or breakout) the gold market goes its own way, and does not correlate to the USD.

That’s exactly why our point is that both markets track each other (inverted) directionally. They do so except when ‘major chart events’ hit the gold market.

Leading Indicator: Gold to Treasuries directional inverted correlation

The next leading indicator appears to be directionally reliable in forecasting the price of gold. It means this correlation helps understand the direction: up vs. down.

The rate of 20 year Treasuries is shown in light grey on below chart while the gold price is reflected in black.

There is a clear correlation between both markets. The 4 divergences are shown in red, and it’s clear that it’s really different compared to the divergences on the gold / USD inverted chart shown above.

These divergences tended to last 6 to 9 months, much shorter than the gold / USD leading indicator. The divergences took place during strong ‘risk off’ periods.

Confirming Indicator For 2020 and 2021: Gold vs TIP

Let’s revise the 3 gold price leading indicators outlined in our gold price forecast: gold’s COT, the inverted gold / USD correlation and the inverted gold / interest rates correlation.

All 3 of them have a certain level of reliability, and all of them help understand the future gold price direction in a different way. They should be interpreted in a complementary way, and the word that stands out here is ‘interpretation’.

Now we can get the help of a ‘confirmation indicator’. It is the TIP ETF (inflation expectations). This supports our gold price forecast as it is directly correlated to gold’s price.

However, TIP ETF is not a leading indicator for gold’s price.

So TIP ETF should be considered together with the 3 other leading indicators. Yes, that’s how complex it is to forecast gold prices. It goes beyond what you tend to read in media.

The Longest Gold Price Chart (50 years)

Below is the 50 year gold price chart. This a quarterly (!) chart so it is meant to read the most dominant trends.

We believe this chart contains a wealth of insights. It is especially useful for our gold price forecast for 2020 and 2021.

Let’s review the insights we derive from this gold price chart, and how it is useful for our gold prediction:

1. Gold’s bull markets tend to rise in 3 phases. Each phase is more aggressive in its rise.
2. The consolidations tend to have a similar pattern as well: a rounding formation that ends with a horizontal breakout.
3. The really strong rallies occur a minority of the time, particularly in phase 3 of an uptrend. That’s when most money is made.

All that said we do expect a steady rise back to all-time highs but obviously a break to new highs will not take place in 2020 nor in 2021.

Give the gold market the time it needs. Buy the dips, slowly accumulate. This horizontal breakout is something we have seen before, and it is strongly bullish. It is the basis of our gold forecast for 2020 and beyond 2021.

Gold Chart and Price Targets

Let’s now combine the findings of our leading indicators, the observations on gold’s long term chart above (50 years) with the monthly gold chart on 20 years shown below.

Gold ended its 8 year bear market. It started an 8 year bull market in June of 2019 after a horizontal breakout.

The rounding pattern on gold’s chart suggests gold will rise to $1,725 in 2020 and may test $1,925 in 2021. Note that these are spikes, and prices will retrace after hitting those peaks.

We also do not forecast gold to rise to all-time highs after the first test of former all-time highs. It might take 3 attempts before gold breaks out to new highs.

The leading indicators, especially the inverted USD as well as inverted interest rates indicators will help us understand the big picture moves in gold’s price.

The gold COT report will help us understand the spikes to our price targets. We pay special attention to the net long positions of non-commercial traders when gold is bottoming. It should confirm our gold bull market view.

Last but not least the TIP ETF should confirm the direction of gold (not forecast it though).

In 2021 we expect one or two bullish moves, when the COT report shows that the non commercials stop decreasing their net long positions.

We keep a close eye on the flipside of this bullish story. Bearish momentum will pick up once gold falls back below $1,375. Not likely to happen, but the flipside always has to be considered by investors!

Keep Your Eyes Open For A Precious Metals Miners Rally in 2020

We would not exclude precious metals stocks to be more bullish than the metals especially in 2020 and 2021.

How could that be the case?

Because of a few reasons.

First of all, stocks are starting a new ‘risk on’ cycle. That’s what we explained in Stock Market Forecasting Cycle Predicts Bull Market In 2020 as well as our Dow Jones Forecast For 2020 And 2021 (32,000 Points). Consequently this is the right type of environment for precious metals stocks to thrive even though metals will be mildly bullish. That’s because precious metals stocks are in the end stocks, and may react on positive stock market conditions for sure if they are supported by positive metals conditions.

Moreover, as per our 7 Must-See Charts Suggest “Buy Precious Metals Stocks” Going Into 2020 we see some solid precious metals stock ratios. One of them is the GDXJ to gold price embedded below. This is a ratio that rises if there is a risk appetite measure for the precious metals market.

This ratio broke out, and may indicate that precious metals stocks may outperform the metals in 2020 and 2021.

Results of our previous Gold Predictions

As said before we have a track record of forecasting gold and silver spot prices. The table below is based on the forecasts made in prior years, both on our own website in the public domain and even on financial media sites.

Gold Predictions by other Analysts

Interestingly, quite some gold price predictions have been published by analysts in the field. Most of them have a similar price target, with just one being bearish and the rest slightly to extremely bullish.

Obviously a very bullish 2020 for gold is hardly possible. That’s not how bull markets develop. The start slowly and pick up speed over time. So whoever forecasts a gold price of $2,000 in the 2020 is not really connected to the of reality markets.

We will update this list of gold price predictions throughout the year!

Gold Forecast Log: Weekly updated throughout 2020

This is a continuous log to keep track on our gold forecast. We update this on (bi-)weekly basis throughout 2020 with in a bullet style with highlights of the week/month as it relates to our gold projection for 2020.

• First week of January: the gold market is on track to meet our 2020 forecast. We expect more strength in January of 2020. Our projected gold price price of $1750 may be met by end of April after which a cool down period might follow.
• Second week of January: great start of the week for the price of gold.
• The last week of January looked like a breakout for gold. However this was invalidated in the first week of February.
• Going into February 2020 we propose to wait-and-see in the gold market. No position in our portfolios for now, and no clear short term forecast possible until proven otherwise.

Detailed Follow Up on our Gold Forecast (free forecasting email newsletter)

We absolutely recommend to subscribe to our free newsletter in order to receive future updates. We publish updates on our gold forecast. But we also do publish other forecasts.

We continuously, throughout the year, publish updates on our annual forecasts. Any revision in our forecast are published in the public domain and appear in our free newsletter. Therefore, the only way to track the pulse of markets and stay tuned with our forecasts is to subscribe to our free newsletter >>

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