Analysis Of Gold Price Trend For 2017
Updated 23 February 2017: It might appear that gold has stopped its upward march, or has it? My previous analysis pointed to gold reaching $1,250 and that is exactly what it did today! This post has been updated with my latest analysis, see the video below to get the latest forecast.
If you are interested in making a sound investment in Gold, or possibly even rolling over your 401K over into a Gold IRA then
Please read the full article below, and see how the markets have played out exactly as forecast. The gold price for today is currently at $1,233 and heading directly to the $1,250 level where I expect it to encounter some initial resistance. Thus far the gold price movements have been exactly as forecast and it will be very interesting to see how it develops. I will keep updating this article and keep it current to ensure you are kept in the loop of any developments.
Note: This article was originally published on 8 January 2017 and is constantly being updated to track predicted versus actual price movements. Below is an updated video showing where we stand currently.
In this gold price analysis we will be looking deep into our charting crystal ball and provide solid reasons for our gold outlook for 2017. With an analysis like this where we will be looking months ahead, we will be focusing our projections purely on price action. With the current political outlook being as uncertain as it is for many, I believe that traders fall back to fundamental price action and what they see in the charts. In my experience, this approach has served me well.
Gold has constantly been seen as a safe haven during times of conflict and economic turmoil. We all know that diversification is an important part of any portfolio and gold often is a very important way to strengthen your investment. It is because of this that people want to know where gold is heading in 2017. This gold forecast for 2017 is not just about traders that want to benefit from good trades. It is also for people that want to know if their gold based IRAs will perform well in the year ahead, as well as other portfolios and investment strategies that include gold as a primary or at least important part of their investment baskets.
Here's the thing:
Gold is often thought of as a good way to hedge against moves in the stock market, the question is if that is always true. There is definitely an inverse correlation between moves in the stock market and gold, but you might be surprised to find that it is not always as strong or consistent as you might believe.
An interesting article by CNBC (http://www.cnbc.com/2016/02/17/the-problem-with-using-gold-to-hedge.html) has pointed out that over the last 20 years there has been a negative correlation of 0.03 percent between the S&P 500 and gold. That means that there is nearly no constant relationship between the two, despite what everyone believes. The shorter term relationship between the S&P and gold is more volatile, at a rate of 0.121 percent. This is why gold creates such a strong impression as a safe haven against uncertainty in the stock market. There is a substantial short-term effect, but little to no effect in the long run.
The bottom line:
Where does that leave us with regards to the outlook for gold in 2017? Obviously it is still very important for both traders as well as investors that are concerned about their portfolios. The important point to remember is that this means that gold movements really stand on their own, and therefore it forms a very important part of a diversified portfolio.
We already know that the gold outlook for 2017 will be strongly affected by other moves in the market over the short term. We also know that the longer term trends and predictions for gold in 2017 will have little to no correlation to how the rest of the market is going to behave going forward. It therefore makes sense to focus our 2017 predictions for gold on the shorter term for the next 12 to 24 months. That is exactly what I'm going to do.
Quick Historic Overview Of Gold Prices
Gold rose to dizzying heights just before the Occupy Wall Street movement began in September 2011. After that the price of gold wandered mostly sideways, before it plummeted to $1,049 in December 17, 2015.
After that the price of gold fell further to as low as $1,119 in mid-December 2016, leading many to speculate if gold has reached a bottom as it touched levels last seen in 2010. In the beginning of 2017 gold staged a quick recovery, and of course now the question is what is next?
NOTE: This article was originally published on 8 January 2017 and Scenario #2 has been updated to reflect the recent price movements. We will continue to track developments as they unfold.
Where is gold headed in 2017? Our gold price forecast for 2017 will be focusing on the next few months and our outlook for where gold might be heading. For my analysis of gold, the level around $1,180 is crucial. This is because this area, and I must stress that it is not an exact number, has proven itself as a key support and resistance area over many months. In fact, this support and resistance level goes as far back as November 2009, and we encounter it shortly thereafter again in May and August of 2010. It is touched again in June 2013, and tested once more towards the end of 2013.
The $1,180 level becomes a resistance level again in October 2015, only to be convincingly broken in mid February 2016. In November 2016, the price of gold once again drops right through the $1,180 level. The question is now if it still hold significance, or if levels around $1,212 have become more important.
In my view, we have two possible scenarios that are most probable. The one is that the $1,180 level will be broken with little to no effort, and the other is that it will hold temporarily. Either way, we should find out soon which of these two gold forecasts are correct for 2017.
My analysis of gold for 2017 rests upon support and resistance lines, together with Fibonacci levels, which gives further credence to the $1,180 level as it overlaps with the 23.6% Fibo level. The actual price movements for gold going forward in 2017 is based upon Elliott Waves, because it is the only structured methodology I know of that is capable of complex future price movement scenarios.
Scenario #1 For Gold in 2017:
An image is worth a thousand words, so therefore you will find the first scenario for where gold will be heading in 2017 in the chart below. The predicted movement for gold in this case is that in the short term, the gold price will not be able to break through $1,180 convincingly. This will lead it to potentially first test this resistance level a few times, before it drops further to about $1,090 by May 2017. After that, I would expect gold to push back up during the rest of 2017, but not very strongly.
Scenario #2 For Gold in 2017:
This second version of our prediction for the price movement of gold in 2017 is that it will immediately break through the $1,180 level, and then test it as support. Due to the strength of this move, I would expect gold to climb further as part of an emotive or impulsive move, and likely reach all the way to $1,375 before the end of 2017.
UPDATE: 11 January 2017 – Since the article was first published, the price of gold has moved convincingly above the $1,180 level. This means that our focus shifts to Scenario #2, especially since the recent price move has been very impulsive in nature. We therefore expect the price to reach at least $1,200 or slightly above as frenzy trading pushes it over that important psychological level, reaching point #1 on the chart above. This should finish the first part of the Elliott wave. We then expect it to briefly retreat back to re-test the $1,180 level before continuing higher again. The zoomed-in version of the chart below focuses on the last year's data from 2016 until now.
UPDATED: 27 January 2017 – Watch the video below!
Will the gold rate in future increase or decrease? At this point, my analysis is telling me that gold will be heading up for at least the next 9 months or so. A long term gold forecast including gold price predictions for next 5 years would simply be guesswork at this point.
If I have to make a gold price predictions for the next 5 years it would be that we will first see gold go up to as high as $1,375 within 2017, and then quite likely head down after that. The reason for this long term view on if the gold rate will in future increase or decrease is because the current bigger wave formation looks more like the end of a “Flat” correction. This means that at least with regards to how the charts stand now, gold will not indefinitely be rocketing up, despite what everyone might tell you.