Gold Forecast: Gold Prices Likely To Test $1360 In February

Monday, February 11, 2019

fine gold

After some deliberation, I altered my short-term outlook for precious metals and miners last week. The rally out of the 45-day cycle low in miners was troubling me. The 5 to 7-day thrust was robust and on expanding volume. It's rare for a move like that to terminate abruptly; there is almost always a higher high.

Around Wednesday, I began to see the potential for a budding bull flag, that's when I felt we might see extended highs into February.

Consequently, if gold maintains support between $1300 and $1310, a retest of the $1360 level seems likely before this cycle finally corrects.

Gold Weekly Prices

Since bottoming in late 2015, gold has tested the $1360 level to $1375 territory on three different occasions. Prices are once again within striking distance, and as long as gold persists above $1310, another assault on $1360 remains likely. Unfortunately, at 25-weeks this cycle is quite mature, so it probably doesn't have the stamina to breakout above $1380 - $1400 at this time. In my opinion, the odds favor a top around $1365 (+/- $10.00) in the coming days/weeks followed by a 6-month low in March or April.

gold continuous contract chart

Gold Daily Prices

Gold prices formed a swing low on Friday after Thursday's dip to $1306.40. To confirm the potential bull flag, gold has to close above $1331.10. If established, the patterns objective would be approximately $1365. For this to transpire, we need to see some significant upside follow-through early next week. Closing below Thursday's low ($1306.40) would nullify the bullish flag pattern.

Silver Weekly Prices

If gold prices test the $1360 area, silver prices will likely strike the trendline and 200-week MA converging around $16.50.

Silver Daily Prices

Silver prices corrected nearly $0.60 after reaching $16.20. However, we never got progressive closes below the 10-day EMA. Silver created a swing low on Friday. A daily close above $16.00 next week would support the weekly target near $16.50.

GDX

A close above $22.70 next week would establish a bull flag breakout. The potential target for the pattern is around $24.70. A breakdown below $21.50 would eliminate the bull flag and support an immediate correction.

GDXJ

This intermediate cycle in precious metals and miners is running out of steam. The MACD and MFI indicators are diverging negatively supporting a decline in momentum. Nevertheless, the near vertical move out of the 45-day low $29.25 was too compelling to ignore. That type of momentum thrust is rarely terminal. Meaning we should expect a rally above $33.00 before prices peak and decline into the next 6-month cycle low.

S&P 500

Prices rebounded sharply off the December low and tagged the 200-day MA. Stocks are pulling back slightly. Progressive closes below 2600 would support a retest of the 2400 level in February or early March. Another dip in the stock market could be what propels gold back to the $1360 area.

WTIC Daily

For over a month now I've been looking for oil to sink back towards the $42.00 level. A decline in the stock market would conceivably drag oil prices lower. Progressive daily closes below $50.00 would support my outlook for a retest of $42.00.

Conclusion

Is a significant breakout above $1400 in gold prices possible at this time? Probably not - mainly because the intermediate cycle is already on borrowed time at 25-weeks. Of course, a political event or a breakdown in trade talks with China could change things in an instant.

I think the odds favor a little more upside in precious metals before the next pullback into the next 6-month low (possibly March). A rally in gold to around $1360 may correspond with a swift retracement in the stock market and oil. The impending price action should shed some light.

For additional commentary please visit us at www.GoldPredict.com

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AG Thornson

AG is an accredited CMT through the MTA and the editor of GoldPredict.com. His members receive daily updates and regularly scheduled reports 3-days a week. He prides himself on making his analysis easy to understand through the use of adaptive and creative charting methods. You can reach AG at info@GoldPredict.com.