Gold Price Forecast: Gold Prepping For Multi-Week Rally

Sunday, December 1, 2019

gold analysis

Last week's trading saw gold forming its low early in the week - here doing so with the tag of the 1456.70 figure (February, 2020 contract), made on a Tuesday time bottom. From there, strength was seen into later in the week, with the metal pushing up to a Friday high of 1472.90 - also ending the week right at the same.

72-Day Cycle Extended

From the comments made in past articles, the next low of significance is expected to come from the 72-day time cycle, with that wave never having confirmed its bottom. In terms of time, it is well into extended territory for a low to form. Here again is our 72-day wave, in chart format:

From our 72-day chart, the recent decline has put this wave into 'oversold' region, and, with our detrend indicator projecting higher into January, we should be looking for the next multi-week rally phase to soon take hold.

In terms of price, once the low for this 72-day wave has formed - if not already in place - then the minimum expectation calls for a rally back to the 72-day moving average or higher. Having said that, due to the extended position of this wave, there is the decent potential for additional follow-through above that moving average, such as to the 50-61% retracement of the most recent swing down.

Gold, Short-Term

For the very near-term, as mentioned last weekend the downward phase of the smaller 10-day cycle was deemed to be in force, which favored additional weakness into early last week. Here again is that 10-day wave:

In terms of time, in our Gold Wave Trader report we projected the last bottom for this 10-day cycle into the November 25-27 timeframe, where it ended up being registered on Tuesday, November 26th, doing so with the tag of the 1456.70 figure (note: we have now moved to the February, 2020 contract for our numbers).

For the short-term then, the upward phase of the 10-day cycle is deemed to be back in force, with the ideal path favoring additional strength into the new trading week, with the decent potential for a test - or push back above - the prior 10-day top (1486). The net positive here is that gold was able to form the bullish pattern of a 'higher-low' on the recent downward phase of this 10-day wave - which is something we would want to see during the early stages of a larger rally, such as with the 72-day cycle.

With the above said and noted, the probabilities do favor additional strength in the coming days - due to the configuration of the 10-day cycle. From there, another decline phase with this wave is likely to materialize into the second week of December. The way that the current upward phase (and the next downward phase) of this 10-day wave plays out should offer up some telling information in regards to the larger trend.

The Mid-Term View

As noted earlier, the next multi-week rally should come from the 72-day cycle, ideally playing out into the month of January or later, as per our cycle detrend's projected path. In terms of patterns, however, until proven otherwise that rally is favored to end up as a countertrend affair, holding below the early-September peak of 1573.30 (February, 2020 contract). Take a look again at the next chart:

Until proven otherwise, the downward phase of the larger 310-day cycle is currently assumed to be pointing south into early-Spring of next year. If correct, then the odds will favor the next rally phase from the smaller 72-day wave to end up as countertrend - against that September peak of 1573. From there, another decline should play out into the Spring of 2020, one which sees the 310-day moving average acting as a magnet - but one which should end up as a larger countertrend affair, with key monthly closing support around the 1360 figure, plus or minus.

Gold's Long-Term View

For the bigger picture, the decline into the next 310-day trough should be followed by another larger-degree rally phase with that same cycle, one which should take the metal back above the September peak into later next year. In terms of price, we see the decent potential for an eventual push up to the 1700's into that timeframe, where we would be looking for technical indications of a much larger-degree peak forming.

Commercial Hedgers

With the holiday-shortened week last week, the latest numbers from the CFTC won't be released until early this week. We'll update these in our Gold Wave Trader report on Tuesday evening.

U.S. Stock Market

From the comments made in recent weeks, the next decent swing top for U.S. stocks is due to materialize at anytime - and should come from the 45-day cycle:

With the above said and noted, it would now take a reversal back below the 3089.48 SPX CASH figure to actually confirm a downturn with our 45-day cycle. Having said that, this number should continue to rise going forward, depending on the price and technical action seen in-between.

Stepping back slightly, once the next peak for the 45-day cycle is in place, then the odds will favor a drop back to the 35-day moving average on the SPX, though with the obvious potential for additional follow-through below the same - simply due to the (mid-term) technical configuration of the market.

Having said the above, the next downward phase of the 45-day wave is expected to end up as a countertrend affair - which only means that it should remain above the 2855.94 SPX CASH figure, which is the prior labeled trough for this component. If correct, a push back to new all-time highs should continue to be seen on the next upward phase of this wave into what looks to be the February - April timeframe of next year.

For the bigger picture with stocks, we are on the lookout for a much larger-degree peak into the February - April, 2020 range, a peak that should come from the combination of the larger-degree cycles that we track - which includes the larger four-year wave. We'll take a look at the longer-term view in a future article, so stay tuned.

Jim Curry

The Gold Wave Trader


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Jim Curry is the editor and publisher of The Gold Wave Trader and Market Turns advisories - each of which specializes in the use of cyclic and statistical analysis to time the Gold and U.S. stock markets. He is also the author of several trading-related e-books, and can be reached at the URL above.