From Artifacts to Counting: Can Gold Soar to $3,000? | chart watcher

That’s the strange thing about gold. always The relic… Until it doesn’t. And if not, everyone swears it is. always It was an alternative currency (why would anyone think it was a relic in the first place?).

The yellow metal’s surge in relic or “sound money” calculus – hitting an all-time high of $2395.60 – has surprised disbelieving investors and even die-hard gold bugs. The problem is: Some analysts say this record high is the low end of the range, not the high end.

Why do some analysts claim gold could reach $3,000?

$3,000 per ounce is 25% above current prices and up 64% from the last low in October 2023. But what could drive gold so high?

• Fiat under pressure; Financial Oppression (BofA) Mentioned in 2020)?
• stubborn inflation; Huge government debt (says Mind Money, a European financial engineering firm)?
• BRICS de-dollarization efforts; New gold-backed currencies are being issued around the world, but are they all aimed at challenging the unipolar stance of the US dollar?

Let’s take a look at the macro price movement of gold.

Chart 1. $GOLD monthly chart. We see a series of sideways fits and begin to lead to the current parabolic rise. Chart source: StockCharts.com. For educational purposes only.

Here’s gold’s trajectory starting from the 2016 lows: For the most part, the yellow metal has traded within a fairly wide range between uptrends.

Pay attention to Chaikin Money Flow (CMF). It is highlighted with a blue circle. This indicates momentum through buying pressure.

• After gold hit its peak in 2016 (institutional buying?), buying pressure increased, but selling pressure was nowhere near what it was before that peak.
• In 2019, CMF levels rose above the zero line again, this time with a strong breakout (see dotted black line) and a rally that saw the Federal Reserve’s injection into the repo market as another form of quantitative easing.
• And in late 2023, despite elevated valuations, amid rising geopolitical risks and growing concerns about dollar depreciation, the CMF crossed the zero line again, leading to the stunning surge we have seen over the past two months.

Here’s the big question…

Is the 2023 price cap the new price floor after 2024?

Now analysts at major banks are revising their gold forecasts, pointing to a conflict between near-term economic changes and deeper geopolitical rifts. Making traditional evaluation metrics obsolete.

Let’s take a look at the current price action.

Chart 2. $GOLD daily chart. Notice the parabolic motion that is losing momentum. Chart source: StockCharts.com. For educational purposes.

If you’ve been following the national news, you probably know that gold bars are selling like hotcakes at Costco. What are you talking about? This tells us that despite sky-high valuations, retail sales for gold are frenzied.

Nonetheless, there are many technical and fundamental reasons to expect a downturn.

• First of all, sticky inflation (have you seen the latest CPI and PPI reports?) indicates that interest rates are likely to be higher for an extended period of time.
• Money Flow Index (MFI)The volume-weighted RSI, is within “overbought” territory.
• This time on a daily scale, CMF fell into “selling pressure” territory.

However, there are many reasons to be bullish on gold, both technically, from a macro perspective (as seen in the monthly chart above), and fundamentally, as discussed at the top of this article.

Keep an eye on $2,100. This is the 2023 resistance line. level. Do you offer support for next steps?

When prices fall, what happens if they don’t fall to that level? In this case, check out the latest swing low of $2,150 along with Ichimoku Cloud’s Kumo range..

Gold is a scary deal

Gold’s rise to $2,395.60 and whispers of a possible rise to $3,000 have led to a seismic shift in the way investors view this age-old asset. It also reflects fears surrounding the economy, the future state of the dollar following dedollarization, and declining confidence in the Federal Reserve’s ability to implement sound monetary policy.

Gold is a horror trade. And if you are bullish on gold and are monitoring all fundamental and geopolitical news affecting its valuation, you now have the technical context to get the 360-degree perspective you need to make your own predictions.

disclaimer: This blog is written for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting with a financial professional.