Gold Forecast: A Decline Below $1,200 Before Bottoming

Gold continues to rebound, but the rally in miners lacks conviction; trading volume is anemic. Our primary forecast expects another decline in metals and miners before reaching a sustainable low.

10-year Treasury yields broke out above the bearish short-term trendline in June. Yields peaked July 7^th and corrected to the June 29th gap. If yields reverse and begin to rally, metals and miners should rollover.

US Dollar

Prices dropped to the measured move target and examined the 94.00 level. Short-term cycles should begin to turn up. A daily close above 95.00 is necessary to initiate a bottom.

10-YEAR TREASURY YIELDS

Yields pulled back to fill the June 29th gap. Closing back above the 200-day MA (22.80) could spur another up leg. Gold prices should soften as yields rise.

Gold Price Chart

Prices are testing the upper range of our resistance box. A daily close above $1,250 could expand the rebound towards $1,260 - $1,265. Once complete, gold should drop below $1,200.

Silver Price Chart

Prices are inching their way into the resistance box. The next swing high should flag the end to this rebound.

GDX

Miners closed above the 50-day EMA. We expect notable resistance between $22.40 - $22.80. A swing high in that area should end this recovery. GDX breaking below $21.00 will likely correspond with gold dropping below $1,200. Note: Consecutive daily closes above the upper trendline would nullify our forecast.

GDXJ

Juniors continue to struggle at the 50-day EMA. Volume has steadily decreased since the July 10th reversal. The next swing high should identify a top. Breaking the trendline will setup a decline to new 2017 lows.

DUST

I will consider entering a small position is DUST IF prices form a swing low between $28.00 and $29.50.

JDST

I'll consider a short-term position in JDST IF prices form a swing low and maintain the trendline. 

I'll be on the lookout for signs of topping in precious metals and miners. A swing low in 10-year yields or an approved swing high in gold could initiate the reversal. Preliminary cycle work supports a September bottom. Gold is expected to remain above the December $1,124 low. Consecutive closes above $1,265 would invalidate our forecast.

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