Gold Price Targets On The Downside
Almost everyone else continues to focus on the next upside leg for gold (GLD). In this article I will show some charts that allow for possible downside targets within the prevailing half-century uptrend.
There are four charts. I will provide some commentary after each chart. After that, I will add some final comments. The first chart follows…
Gold Prices 7-Year Uptrend – (Chart No. 1)
There are two possible support lines drawn on the chart above. The primary support line (B) dates back to the gold price low in December 2015.
Based on monthly average closing prices gold is currently touching a shorter support line (A); which, if it breaks down from here, does not appear to have much to keep it from falling back to as low as $1350-$1400 oz.
The second chart is virtually the same as Chart No. 1 above except that the prices have been adjusted for inflation…
Gold Prices 7-Year Uptrend – Inflation-Adjusted (Chart No. 2)
The support line drawn touches the same points as support line (B) in Chart No. 1. In this chart though, I have not drawn in support line (A). It should be apparent why not.
In Chart No. 2, we can see that the gold price has already broken down and is in a clearly-defined downtrend dating back to its high in the summer of 2020.
The next potential support is in the same area as indicated in Chart No. 1; i.e., $1350-$1400 oz.
Immediately below is the third chart…
Gold Prices 50-Year Uptrend – (Chart No. 3)
In Chart No. 3 there is a basic long-term uptrend dating back to 1970. At that time the price of gold was $36.56 oz. The other point of connection for the uptrend line was in March 2001 at $263.00 oz. This was the low point for the gold price after peaking twenty-one years earlier in 1980.
On the downside, the gold price could drop to about $1200.00 oz. without violating the price uptrend line dating back to 1970.
The next (and last) chart is, again, the same as the chart just above (No. 3), and once again, the prices have been adjusted for inflation…
Gold Prices 50-Year Uptrend – Inflation-Adjusted (Chart No. 4)
In Chart No. 4 above, the support line (A) is similar to that drawn in Chart No. 1, however, the potential support on a short-term basis comes in at $1450-$1500 oz., about $100 oz. higher than indicated earlier.
The biggest difference in Chart No. 4 versus what appears to be possible in the previous charts, is that the gold price could drop to as low as $700 oz. (ouch!) and still remain within its well-established long-term uptrend dating back to 1970.
Kelsey Williams Is The Author Of Two Books: Inflation, What It Is, What It Isn't, And Who's Responsible For It And more
What about for those of us who don't believe in technical analysis? Do you have any additional insight? Thanks.
Yes, TA is rather worthless in this instance. What is the point of drawing a line that goes back 50 years and before the gold standard even ended? I mean... if the author is going to do that at least draw a line somewhere from when gold was freely traded.
Perhaps the first correction of gold in the mid 70s would make more sense if u were going to do it?
But even then you're looking at fundamentals that have completely changed and are irrelevant. If u want to use TA for short term trading...ok i guess but even then the success rate is marginal at best. There's a saying that TA is astrology for men and I tend to believe that.