Gold Price Forecast: Gold's 4-Year Cycle Pushing Up Into 2020

Sunday, November 24, 2019

gold bars

Last week's action saw gold initially holding firm, with the metal pushing up to a high of 1479.20 - made in Wednesday's session. From there, however, weakness was seen into later in the week, here dropping down to a Friday low of 1461.20 - before bouncing slightly off the same to end the day/week.

Gold, Short-Term

For the very near-term, the upward phase of the 10-day cycle was responsible for the bounce seen into last week, with that wave having been projected higher into the November 18-20 timeframe. That high came and went with the recent tag of the 1479.20 figure, with the downward phase of this wave now deemed to be back in force, ideally headed lower into the new trading week. Here is that wave, in chart format:

With the above said and noted, the overall assumption is that the next downward phase of the 10-day cycle will play out into early next week or later, with this wave next projected to trough around the November 25-27 timeframe. From there, it should bottom once again, giving way to another short-term rally into early-December. In terms of price, there is the potential for a push back to or below the 1446.00 swing bottom before this wave next attempts to trough.

Gold's 4-8 Week Outlook

Stepping back, the next larger rally phase should come from the 72-day cycle, which is shown again on the chart below:

In terms of price, the 72-day cycle never made a push back above our upside ‘reversal point’ of 1521.80, which was the key level to confirm this wave had bottomed. Basically, it would currently take a reversal back above that 1521.80 figure (December, 2019 contract) to confirm this wave to have turned, though this number is expected to drop sharply in the coming days, depending on the action with technicals and price.

With the above then said and noted, if the low for the 72-day cycle is not in place, then the next trough with the 10-day cycle could well be the one that bottoms the larger component. Either way, from whatever low that forms with the 72-day wave, the next upward phase of the same should see a minimum rally back to the 72-day moving average or better into the mid-December to mid-January timeframe, with the latter actually favored - due to the normal seasonal tendencies with gold. 

In terms of patterns, due to the configuration of the larger 310-day cycle that we track, the next upward phase of the 72-day cycle is currently favored to end up as a countertrend affair, which simply means that it should remain below the 1566.00 swing top, seen back in early-September. Here again is that 310-day wave:

Stepping back further, following what is looking to be a countertrend rally with the 72-day cycle in the next 4-8 weeks, we should see another turn south into what is projected to be the Spring of next year. In terms of price, that decline is eventually expected to take the metal back to its rising 310-day moving average, though is expected to end up as a larger countertrend affair - holding well above the August, 2018 trough, which is the last labeled bottom for this 310-day component.

Gold, Bigger Picture

For the bigger picture, the decline into the next 310-day trough should be followed by another larger-degree rally phase with that cycle, one which is expected to last well into the late-2020 timeframe - with the decent potential to reach up to the 1700's (plus or minus) before topping. This is due to the configuration of the larger four-year cycle, which also bottomed back in August of 2018:

On the chart above, of note is that both the detrend and momentum oscillators are moving higher at the present time, which should favor any correction with the smaller 310-day component to end up as a countertrend affair into the Spring of 2020. If correct, higher highs should play out into the late-2020 timeframe or beyond, where we will be looking for the next major top to form.

Note: we will be noting the more precise details of how the above will play out in our long-term outlook for the metal, which will be released later this week (you can add yourself to our website mailing list for notification). 

Commercial Hedgers

In looking again at the latest numbers from the CFTC, the commercial hedgers added approximately 18,000 contracts to the short side, which raises their current net short total back up to -319,095 contracts - with the data current to the 11/19/19 close. As mentioned many times in prior months, the current net shorts held by the hedgers should be a continued negative indication in the coming months, particularly in light of the configuration of our mid-term 310-day time cycle. At some point, however, this will be reversed - ideally sometime on or before the next 310-day trough, thus allowing for the next upward phase of that wave to play out into later next year.

U.S. Stock Market

From the comments made last weekend, the next decent swing top for U.S. stocks is due to materialize at anytime - and should come from the 45-day cycle that we track:

Stepping back then, it would currently take a reversal back below the 3072.90 SPX CASH figure to confirm this 45-day cycle to have turned south for its correction phase - a number which should continue to rise going forward, depending on the action. Of note on our chart is that momentum is starting to turn south with this cycle, and with that the wave has either topped with the most recent swing high of 3127, or else would strongly be favored to top with any new high in price (i.e., momentum often turns first).

Once the 45-day cycle does top out, then - due to my rules with cycles and moving averages - we should expect to see the SPX dropping back to its 35-day moving average or lower in the days/weeks ahead. Having said that, due to the configuration of the larger cycles that we track, we would expect the correction with the 45-day component to end up as countertrend, with a push back to new all-time highs expected to play out on the next upward phase of this wave. From there, we will need to be on the lookout for a mid-term peak with stocks, expected to come from the 180-day cycle:

The chart above shows the most dominant mid-term cycle for stocks, which is the 180-day (or 9-month) wave. From the comments made in past months, this cycle is seen as heading higher into at least the early-2020 timeframe, with the channels projecting a potential push up to the 3200's or better before it tops. Once we get into that early-2020 timeframe, we will need to be on the lookout for technical indications that the next major top is forming, as what follows should be a very sharp, multi-month decline into the next larger-degree bottom. 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.