Is gold bullish or is gold bearish? A great question, as there is a profound difference in views.
Some are calling for a bullish gold outlook based on the risk level in the market. Others have a bearish gold outlook based on a strong U.S. dollar outlook. We believe that gold is at a crossroad right now, and that behavior at the current gold price of $1250 will determine the bullish or bearish outlook for the coming months. Today’s price level is the proverbial line in the sand.
We wrote in Augst that gold would retrace to $1250, and our call was (yet another time) spot on. What’s next? Well, that depends on how prices will behave around this level, as the importance of $1250 gold should not be underestimated as visualized on below chart. Today’s price level coincides with a bearish trend line, so gold bulls should hope this level holds strong.
If, and that’s a big IF, the price of gold breaks down, then we are convinced gold will be eyeing $1000 in 2017, as suggested in our gold price forecast for 2017.
However, there is a still a bullish outcome, which will be materialized if $1250 gold holds. Again, that is a big IF, and it shows the importance of the current price level.
We are closely watching what is happening with the gold price in the coming weeks, as that will determine a bullish or bearish outlook for gold for the coming months.