Forecasting a Downturn in Gold

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Gold prices achieved new heights last week, closing at record levels, with central banks’ interest and geopolitical tensions as key factors. Yet, we’re advising traders to be cautious, as the current rally might not be as robust as it seems.

Last week, XAU/USD settled at $2330.160, up $97.04 or +4.35%.

The market appears ripe for a downturn, and those holding positions near the peak might face significant losses. Therefore, the short-term forecast leans towards a cautious bearish outlook for gold.

James Hyerczyk
April 6, 2024
Gold Prices Forecast: Was a Bull Trap Set on Friday? | FXEmpire

Perhaps. That was Saturday But gold closed at $2,358.09 on Tuesday. That is up another 1.2% in two days.

Predictions are tough. Especially those predictions about the future.


16 thoughts on “Forecasting a Downturn in Gold

  1. Why yes, the central bank of Zimbabwe just found an extra 5,000 tons of gold they didn’t know they had. Possibly more!
    This exciting reserve sell -off is going to change the market in meaningful ways.
    And now you too can own some original solid gold Zimbabwe 99.999% fine gold certificates. Easily purchased from all the most reputable banks in London for just $999.99 per Oz.
    Is your central bank short on reserve assets? These solid gold 99.999% fine solid gold certificates are the answer.
    Ask about our handy gold leasing program!
    A little short on your 401K? These will feel just like owning real gold. But without all the weight!
    You should hurry though, were not sure how long we can keep the latest self-appointed president for life to hold this price level!
    Don’t pass up this exciting offer!

    Fake and gay manipulations. Has America quit printing money? Borrowing a trillion dollars every 3 months? Until they do the price is going up in the long run.
    Gold will always be worth something. Which is more than you can say for currencies issued by failing empires. Or electrons when the powers out.

    • Well said.

      The hard transition of thought for most, will be finding a standard and objective measure of the value of physical assets, as the world begins to acknowedge there is no value in any fiat currency.

      Chicken eggs are a cumbersome measure. If gold itself becomes the measure, how do you measure the value of gold?

      • Base the value of gold relative to grams of 4% enriched uranium, which is right in the middle of the band for a light water reactor.

        A side effect of using uranium as the anchor point for currency would be to jump-start the push for thorium-based nuke reactors. Thorium is way more prevalent in Earth’s crust than U235. Otherwise, you’re putting your money into a reactor to make kilowatts, which is in fact what we do anyway.

      • To me “value” is the standard. Not the object. We place value on things we need or desire.
        As someone else places value on what they’re trading.
        And all trading is about hedging/leveraging value of what one possess.
        What we have today is just a grabble by corporate/ government to take a skim from all trade. And provide as little for doing it as possible.
        Thus the reason were brainwashed to value all things and trading in dollars.
        And pay in interest and taxes.
        Our problem is they haven’t the slightest compunction over murdering large groups of people to keep it going.

  2. Gah.

    Don’t buy because the price is down from the peak. Or, buy because it’s on sale.
    Don’t buy because the price is at all time high. Or, buy because it’s going up.

    There’s always a reason to buy or not, regardless of whether the price of -whatever- just hit a high or not. You need to evaluate many more factors before making a buy (or sell) decision than just the price in isolation.

  3. I don’t know what Gold is going to do – for now I’m focusing on other things. Primarily base metals like brass, copper, lead, and iron.
    My biggest need is a wood stove, but I keep buying ammo!

  4. Adjust for inflation, and neither Au nor Ag are anywhere near all-time highs.
    We are printing money like it’s going out of style.

    Inflation is bad, much worse than the official rate. But it can get a lot worse. My brother passed through returning from South America; Chile and Argentina, to be specific. He had a small stack of 1000 Argentine peso notes. it’s the largest bill they print. He got them for about one USD each. In Argentina, inflation is running about 25%. Not so bad you say? Oh, I mean about 25% per month.

    Gold and silver are up in nominal terms, but they have a LONG way to go.

  5. “Gold,” as well as “silver,” “platinum,” et al is just a reasonably portable exchange media that has achieved enough widespread acceptance to be useful.

    The point of “gold” is the same as “dollars,” “rubles,” or “yen” – a portable, and consistently reliable, medium of exchange, because the point is not “gold” but “food,” “shelter,” “vehicles,” “clothes,” “public works projects,” etc. The difference between “gold” and “dollars” (or any other manufactured exchange media someone has, or might, create) is “reliability of exchange rate.”

    Example: A century ago a high quality 1911 handgun could be procured for approximately one ounce of gold; today, a high quality 1911 handgun can be obtained for approximately one ounce of gold.

    Humans can mess with the exchange value of dollars, zlotys, rubles or sheep, but “gold” and its kin in the media exhange world are, fortunately, largely beyond manipulative reach, FDR-like politicans excepted (Random Thought: would it be useful to categorize, and rank, politicians in “FDR-Equivalence” units?)

    • I would bet that a number of central banks are manipulating the price of gold with net sales or purchases.

      • I have no doubt at all that is the case, but that manipulation is incremental, affected both by selling and buying large quantities, and perception of potential financial hazard. While gold price may fluctuate, sometimes by a hundred dollars per ounce or more, it doesn’t drop to “nothing” overnight.

        FDR, through executive order, forced citizens to sell their gold to the federal government at a government-fixed price which held gold at one per-ounce price until Nixon ended the practice (the Brits also took similar action in the 1930s). That’s a bit more draconian than a few percent up or down daily.

        Could government repeat what FDR did? Maybe, but then the focus would become not just the price of gold but the potential demise of that government.

        • They may try to do an FDR 2.0 but the level of trust is such that it is likely to fail.

    • I think the price of a high quality dress suit, in gold, has been unchanged since the days of Julius Caesar.

      The writings of Ludwig von Mises on the subject are wonderful. “Human Action” is excellent. For a deeper look, there is “The theory of money and credit”. One lesson I learned is that money is a psychological object, something that by community agreement has come to be accepted as a medium of exchange. What makes that acceptance durable is the realization that the chosen medium is hard to debase — which is why fiat “money” is an inferior answer.

  6. True about fiat money but more conventional economists have convinced me that there isn’t enough gold or even gold and silver in the world to handle the volume of transactions needed to keep the economy working. My solution is a currency based on a market basket of real stuff. Gold and silver would be included but also stuff like wheat, oil, rice, coffee. To keep everyone honest, the currency would need to be redeemable for the contents of the market basket. Few people would actually do that but it would have a deterrent value and the value would move in concert with real stuff.

    • On the “gold is too scarce” argument, that’s utter BS and any person actually competent in economics would know better than to make such a claim. That argument has always been the scam used by fiat money advocates to justify their schemes. Similar arguments are the ones used to justify the 2% inflation goal the Fed has been perpetrating on us.
      The correct analysis is that “price” as expressed in some medium of exchange is simply a ratio, with the denominator derived from the quantity of that medium. This is why you get inflation when the money supply is increased by printing presses: double the number of dollars and each dollar’s value is cut in half. This is also why a functioning economy does not “need” inflation, 2% or otherwise. The economic norm is gradually increasing productivity, i.e., gradually increasing availability of goods. So therefore, given a constant supply of money, prices will decline gradually. Which means, in the absence of government-perpetrated inflation, your wealth will gradually increase because of the progress brought to you by your fellow citizens.
      On that fake economic argument: suppose magically the supply of gold were cut to 10% of what it is now: the result simply would be that the price of any item, expressed in ounces of gold, would be 1/10th of what it was before the magic. You might find yourself buying a car with a single gold Eagle rather than with a dozen of them. And the exact same answer would apply if major economies switched to gold money as opposed to fiat money.

  7. The market manipulators may force the price down some for a while but the fundamentals of our economy driving the price up will remain. And the price will
    continue to climb over the long run. In reality it’s not the price of gold that’s going up. It’s the value of the Dollar that’s declining.

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