2011 Gold Price Trends Forecasts
Gold price trends forecasts for 2011
( Please scroll down for 2010 gold price trends reports )
Q4 2011 Gold Price Forecast
30 Sept 2011
Q4 2011 Gold Price Forecast – Hitting USD2000 to USD2020 an ounce
A quick summary of Q1 to Q3 2011:
Gold price remained on the uptrend throughout 2011. Gold price’s lowest price was 1307 (24 Jan 2011), and was up to 1920 (5 Sept 2011). An increase of over USD600, 46% rise in 9 months.
After gold price breaking above 1650, gold price entered the aggressive upward momentum area 1700-1900. On 6 August 2011, gold price broke above 1650, and continued to rise to 1920.
With the rising popularity of gold as an alternative investment, the daily trading range and volume for gold price had been much greater. In 2011, it has been quite normal to see a USD50-USD60 dollars range for gold price. Comparing to previous 3 years, gold price would normally see a fluctuation of USD20-USD per day.
Gold price was on a strong rally during July and August 2011, up 30% in 8 weeks from 1477 to 1920 (6 Sept 2011), then gold price went through a correction of 20% down to 1532 (26 Sept 2011) at the end of Q3.
Technically, gold price had entered a panic buying area supported by rising safe haven demand. On the technical side, gold price was expected to see a correction after hitting 1630-1650 area, but that did not happen. In fact, gold price just went straight pass 1650, and remained very bullish.
After surpassing 1700, 1800 was not much of a resistance for gold price. In fact gold price just rose sharply from 1800 to 1900 in less than 1 month.
We have seen amazing high trading volumes and gold price was going through daily rises of USD60-USD70 during most of July and August.
On the fundamental side, USD index was on a downtrend, from 80.8 (14 Jan 11) to 73.02 (29 April 11). US faced with rising debts problems, and even saw a downgrade of its debts rating by Standard and Poor’s in August 11, which pushed gold price up by over 100 dollars. US economic recovery remained uncertain, US Fed implementing Quantitative Easing policy 2 and maintaining interest rates at low levels.
European debts problems continued to be far from being solved, Greece’s possible default, and Euro zone recovery unable to recover. Thus, raising risk appetite for gold as investors turned to gold as an alternative investment.
Rising unrests in the Middle East, also raised safe haven demand for gold. Egypt riots, Libya unrests, investment demand for gold rose during such turmoils.
Central Banks turned away from USD as the US dollars remained weak. Countries such as China and India raised the gold reserves.
An increased number of hedge funds have been placing long positions in gold price as many are expecting gold price to reach USD2000 an ounce.
Q3 2011 - Rally of gold price up 30% then Correction of 20%
However, after peaking at 1920, gold price went through an aggressive correction. As US dollars index rebounded to 78. And during the US FOMC meeting (21 Sept 2011), the US Fed did not implement the 3rd Quantitative Policy that markets were speculating on which would have pushed gold price up further. On top of that the US CME raised deposit requirements for gold futures contracts on the 23 Sept 2011, which caused further sharp declines in gold price. Gold price hit 1532 on the 26 Sept 2011.
Gold price did manage to get back above 1600 and ended at 1625 at the end of Q3 2011.
Looking at the gold price daily chart below, after forming the double peak at 1920, the technical correction began, and gold price fell sharply to 1532 in just 4 trading days.
The above chart showed a 20% technical correction, and gold price bottomed at 1532. Ad gold price managed to climb back to the 1600-1650 area as bargain hunters were returning to buy gold at cheaper prices.
After this correction, gold price should be getting back towards the 1800 price level at the start of Q4 2011. As Q4 is traditionally a rally season. And the long term trend for gold remains up.
Gold Price Forecast for Q4 2011
Technical Analysis of Gold Price
Looking at the gold price chart below, gold price is in the area of 1700-1900, and had been trading within this range since 5 Sept 2011. Gold price could be testing 1700 for strong support before getting enough momentum to break above 1900 and stay.
Gold price chart 20 Sept 2011 - click at chart to enlarge
Key horizontal price for gold is at 2000, if gold price can break above 1960-1970 area, then 2000 could be achieved.
Key horizontal support for gold price is at 1600-1620 area, if gold price fell through this area, then there could be a long running downturn of the gold price trend. And gold price could test 1450 – 1500 area.
On the fundamental side, US dollars could remain weak against other major currencies, trading below 80. And with the recent disappointing data from the US labour market and continuous worsening debts problems, markets are widely expecting the US Fed to come out with a 3rd Quantitative Easing policy or some stimulus policy to attempt to boost the recovery process.
US stocks markets have been on a down turn also, and thus investors turn to commodities for alternative investments. We have seen an inverse relationship between US stocks and gold price, especially when disappointing US economic data came out and US stocks took a downturn, gold price would see some support and would rise by USD50-USD60 dollars in a single session.
The same problems remain with European debts, and it would seem that the problems would remain unsolved for quite some time. And there are increasing worries of a potential Greece debts default. And, we have also seen down grading of French and Italy credit ratings in recent 2 months.
Summary
Thus, in 2011 so far, we have not seen much positive improvements in US and Euro Zone economic recovery. And, such countries’ GDP are not showing signs of pick up, and debts just seem to be worsening as the months go by. USD index remains weak and US stocks could see further struggles. Gold price would remain in the upward break-out area.
Therefore, gold price is expected to remain bullish in Q4. We are revising our forecast of gold price’s peak to be USD2000 – USD2020 per ounce by the end of 2011.
by Hilda Chan - Vice President Goldtrades Info 20 September 2011
2011 Gold Price Trend Forecast
17 Jan 2011
Forecast: Rally to continue, but in a slower rate than 2010
1.) A Quick Summary of 2010 Gold Price Trend
1a.) Technical Summary:
2010 saw a continued rally in gold price. Gold price was up from USD1044.4 (1 Feb 2010) to USD1431.33 (6 Dec 2010), a 37% increase in 12 months. Gold price stayed within the uptrend channel that started in 2001 when gold price’s lowest price was USD253.5. Gold price has risen close USD1200 over the last 10 years, an increase of 565%. Gold price has doubled in 2 years, from USD682 (Oct 2008).
2010 Q1 February gold price hit its lowest price, then the rally started until Dec 2010 when gold price reached new historical high at 1431.33. Q1 and Q3 were technical corrections seasons, and Q2 and Q4 were rally seasons.
2010 Seasonal Trends for Gold Price ( total rise of 37%):
Q1: highest price was 1136, lowest price was 1044 –correction season (down 8% from 1136)
Q2: new peak achieved at 1255.49 (21 June 2010) – a rally season - (up 11% from 1044)
Q3: July saw a correction; price was down to 1156 – correction - (down 8% from 1255.49)
August & Sept saw another rally – new peak at 1320.6 (27 Sept 2010) – (up 14% from 1156)
Q4: New historical peak achieved at 1431.33 (6 Dec 2010) – a rally season (up 24% from 1156)
1b.) Fundamentals Support for Gold Price’s rally in 2010:
Increased in investment and physical demands were supporting gold price to rise over the whole of 2010. Commodities prices rose as a result of increasing demands mainly from emerging countries, and also caused by increasing speculative demands from the markets. Other commodities such as aluminum, palladium, also surged in 2010.
Physical demands came mainly from emerging countries such as India and China increased their gold reserves as USD was trading at low levels. Indians and Chinese were also purchasing higher volumes of gold as an investment asset. China further opening up its Shanghai gold exchange in Q3 of 2010 further pushed up the gold price. While India’s national spending on gold purchases increased by over 90% in 2010 alone. Another big increase in gold buying came from Russia as physical demand was also up and national reserves in gold holdings also went up as a hedge against the falling US dollar. We also saw some other nations taking the same actions as USD was on a slide.
Increase in the world’s largest ETF fund; SPDR ETF’s gold holdings were up to over 1300 tones from around 1100 tones at the start of 2010. International governments were also increasing their gold holdings as foreign reserves, hedging against the falling USD.
SPDR EFT Gold Trust up 28% in 2010: (see below chart)
Investment demand for gold was also strong as investors turned to gold as an alternative investment against Euro and US dollars. Risk appetite for gold went up and pushed gold price to new peaks as Euro debts caused serious concerns to the markets. As Euro zone debts problems worsened ; Spain, Ireland, Portugal, Greece went into severe troubles with their national debts, and saw their ratings downgraded. EU had to implement undesirable policies to rescue those countries. Euro against USD fell sharply from 1.500 (start of 2010) to 1.180 (June 2010), and recovered slightly to around 1.300 levels as debts problems were easing. The ‘safe haven’ factor as investors turned to gold during the Euro debts crisis, was a major leading factor behind gold price’s strong rally during the 2nd half of 2010.
The other key factor was the weak US economy. US Fed’s Quantitative Easing QE2 rescue policy in Q4 of 2010 gave gold price a final push above 1350, and hitting 1430 (historical peak). The easing of US monetary policy to boost the weak US economy, lead to another surge in investment demand for gold.
USD Index 1 year chart: (see below)
As USD index was trading weak against other major currencies, markets once again turned to gold. High US unemployment rate at around 9.3%, slow retail sales and housing markets still in a slump, US interest rates stayed at low levels during 2010, and gold continued to rise as alternative investment demands increased. Gold price saw a straight daily jump of USD20 each time when there was weak US economic data came out.
2.) NOW, 2011 Gold Price Trend Forecast
Do we think the rally will continue in 2011? The answer is “Yes”. We expect gold price will rise further, but at a slower rate than in 2010. We forecast gold price would increase by 15-25%, the price of gold could rise into the 1680 – 1900 area.
Do we think gold price is in a bubble? No, not at current price levels. And gold price was not always on a straight up since 2008. in 2009, and 2010, each time gold price achieved new peaks, there were healthy corrections of 5% - 10%. The price would be seen as a bubble if there was no corrections in the gold price uptrend.
2a.) Technical Forecast For 2011 Gold Price Trend:
Looking back at our 2010 gold price forecast, we predicted that gold price would see rallies in Q2 and Q4, and Q1 and Q3 would see corrections. As it turned out, we were correct in the predictions of quarterly pattern.
2a.) 2011 Quarterly Technical Trend for Gold Price:
Q1: Technical corrections season – around 8 – 10% from peak price of 1431
Q2: Rally season
Q3: Correction followed by rally
Q4: Rally then corrections begin
A new historical peak could be reached in the area of 1680 – 1900.
(i.) Looking at the 10 year up trend chart below:
Gold price has been on a rising trend since 2001, when price of gold was at around USD250, and the uptrend became steeper started in 2007. As long as gold price remains on the uptrend, gold price should continue to rise in 2011.
(ii.) Looking at the Gold Price Weekly Chart:
Gold price went up from USD 1044 (Feb 2010) to 1431.33 (Dec 2010).
The resistance line indicates that near term key resistance should be around 1550. While key horizontal support should be at 1287. That is, if gold price fell through 1287, then the uptrend of gold price could be collapsed.
As mentioned above, we forecast gold price to be rising through 2011, and could enter the 1680 – 1900 area.
(iii.) Looking at the Gold Price Quarterly Chart:
Gold price should enter a corrections season in Q1 of 2011, could see a 8% - 10% C correction. Gold price could go though another step-by-step rising trend, where Q1 and Q3 could see technical corrections, and Q2 and Q4 would see gold price on a rally. Key horizontal support: 1287.
2b). Fundamentals affecting Gold Price Trend in 2011
Gold price’s physical demands would continue to be on an increase as countries such as India and China’s economies continue to grow. Domestic demands for gold would see increases. We expect China could further expand its gold exchange business as the investment demand from local Chinese has also been on a rise. And there’s also Russia as a key buyer of gold to increase its gold holdings as foreign reserves. However, as China could further increase its interest rates to calm inflation and control growing housing prices, the 2011 GDP growth in China could see a slow down. Thus could cause a slower increase in physical demand for gold, in comparison with 2010.
While European debts problems would keep coming back into the picture, as the problem is still far from being completely resolved. Each time the Euro debts problem creeps into the picture, we could expect the risk appetite for gold to rise again. However, as Euro zone has also kept its key rates at low levels, the EU central banks could begin to lift rates during 2nd half of 2011, this could cause damages to gold price.
After US implemented easing monetary policy, key economic data have shown better signs of US economic recovery. While the US trade deficit, unemployment still remain as weak areas of the overall recovery picture, US Fed’s relaxed monetary policy should remain for at least during the 1st half of 2011. USD index should continue to be weak against other major currencies as US Fed intends to keep USD low for sometime to boost its exports. Gold price would remain strong as the US economic recovery process could still undergo some key obstacles. But, as positive signs of recovery could come into the picture during 2nd half of 2011, gold price could see corrections as investors would turn to US stocks for immediate investments returns.
Inflation fear, would be a key factor in 2011 for a strong gold price. Gold price could also be lifted as fear of inflation continue to rise. As emerging countries have forecast their domestic inflation to be rising as a result of higher than expected domestic growth, domestic prices could see further increase. European countries and US, if are viewed as on the road to recovery, inflation pressure could increase. This could give another support for gold price to see more upwards momentum, as a hedge against inflationary pressure.
In Summary:
We forecast gold price to continue to rise in 2011. As long as the demands are still up, gold price should continue to rise in 2011. However, the rate of increase would not be as significant as in 2010. The trend could also be more volatile as gold price had already gone up by over 30% in 2010, and has come up from USD682 (20 Oct 2008) to 1431 (6 Dec 2010) which is a 110% increase in 2 years. We expect a 15% - 25% increase in gold price this year, in step-by-step uptrend, and if technicals hold, gold price could see USD1680-USD1900 per troy ounce in 2011.
by Hilda Chan - 17 Jan 2011
2010 Q4 Gold Price Trend Forecast:
20 Oct 2010
(I.) A Quick Summary of What Happened in Q3
After the Q2 rally that took gold price up to a new peak of USD1265.1 (June 21, 2010), gold price started a technical correction from the start of July 2010. Gold price fell from 1265.1 to 1156.7 (July 28, 2010). The lowest price in Q3 was 1156.7. Gold price went through a 8.56% correction.
However, the technical correction only lasted for the month of July, and gold price started another rally from the start of August. Gold price rose from to Q3’s low at 1156.7 to 1315.8 (September 30, 2010). A 13.8% increase, gold price rose by USD162.1.
Q3 Peak: 1315.8
Q3 Low: 1156.7
Q3 trend: July – correction, August to September – Rally
Gold price found strong support at 1160-1180 area, and soon regained upward momentum to break above 1200 and entered the 1220 area. From the start of August, gold price went on a straight rally without seeing any further large scales technical corrections.
Gold price found strong support at 1200 after the July correction, and rose sharply above key resistance levels of 1226, 1245, 1265, 1278, and 1300.
Although technical indicators showed strong signs of over-bought, gold price did not see any major corrections. Some minor pullbacks took place, but the overall trend remained bullish. Each time gold price saw a USD10 – USD15 pullback, the bargain hunters came in quickly and gold price was on a rise to new peaks.
Gold price saw a “step-by-step” increase in August and September. After gold price breaking above 1300, each key support price level was tested before a new peak was achieved.
Fundamentals That Supported The Gold Price in Q3:
Risk appetite for gold was extremely high, as USD index fell from 84 to 78. US Dollar entered a dip and investors turned to gold as an alternative investment. US economy saw weak employment and housing data, and recovery was still faced with uncertainties. US Fed eased monetary policy that brought the US Dollar down against other major currencies. Euro strengthened and traded above 1.400.
Apart from the strong investment demand for gold was high, physical demand for gold also saw an increase. India and China were strong buyers of the yellow metal. China also announced that they would open up gold trading markets which further pushed the gold price above 1300.
The rally from September continued into October 2010. US Dollar Index continued to be weak, and news from the US Fed that they would implement a 2nd round of Quantitative Easing Policy further pushed gold price up. A new peak was achieved at 1387.1 (October 14, 2010).
We forecast Q4 will see a continued rally to the end of 2010, and gold price shall see a technical correction starting at the end of December 2010. Another new peak could be achieved during Q4, and we expect gold price could reach USD1420-1450 area.
Technical Analysis for 2010 Q4 God Price Trend:
[A.] Looking at the Weekly Gold Price Chart Below:
Gold price is still inside the Uptrend Channel that started in 2008. As long as gold price stays inside the Uptrend Channel, the long-term trend is still up.
[B.] Looking at the Daily Gold Price Chart Below:
Gold price went through a technical correction in Q1, rally in Q2, correction then rally in Q3, and we expect Q4 to see a rally to a new 2010 peak, followed by a major correction.
(1.) The Upper Resistance Line – indicates top resistance prices for gold. Using the current trend lines, USD1474 would seem to be the maximum resistance price. Each time gold price touches this line, gold price sees a major correction of around 15%.
For example:
2009 Dec’s peak at 1226 led to a correction of 14.8% to 1044 in January 2010.
2009 Feb’s peak at 1006 led to a correction of 14.1% to 864 in April 2008.
(2.) The Medium-term Resistance Line – indicates that each time a new peak touches the medium-term resistance line, gold price sees a minor correction of around 5% - 10%.
For example:
2010 Jan: gold price touched the medium-term resistance line at 1161, and went through a minor correction of 10.07% to 1044.1
2010 May: gold price touched the medium-term resistance line at 1249, and went through a minor correction of 6.6% to 1166.
And, 2010 Oct: gold price touched the medium-term resistance line at 1387, and hit 1315, a 5.2% minor correction.
(3.) The Lower Support Line – indicates the ultimate bottom support prices for gold price trend. If gold price fell through this line, the Long-term Uptrend for gold price could be collapsed.
As the uptrend is still in place, each time gold price touches this line, there is a strong rebound.
2010 July 28: gold price touched the Lower Support Line at 1156.7, and saw a strong rally into 1387.
** Forecast Gold Price Trend for 2010 Q4: (Using the above Lines)
(a.) Key Upper Resistance Area to Watch:
Between (1.) The Upper Resistance Line and (2.) The Medium-term Resistance Line is 1387 – 1474.
(b.) Key Lower Support Area to Watch:
Between the two bottom Support Lines : 1266 - 1229
(c.) Q4 Trend:
After new peak at 1387 – a correction of about 7% to around 1310
Then a rally into 1400 - 1420 – 1450 area
Followed by a major correction of about 15%, with the correction starting towards the end of 2010
[C.] Using the 8H Gold Price Chart Below:
The chart below outlines the key resistance and support prices for gold price in 2010 Q4.
(a.) Horizontal support price: 1229 (if gold price fell through 1229, then the long-term uptrend could collapse, and gold price could fall back t0 USD1000)
(b.) Horizontal resistance price: 1474
(c.) Other Key Resistance Prices:
1352, 1360, 1371, 1386, 1400, 1412, 1426, 1434, 1444, 1452, 1460, 1470
(d.) Other Key Support Prices:
1324, 1315, 1304, 1286, 1272, 1258, 1230
Fundamentals affecting 2010 Q4:
US Dollar shall continue to be weak, and interest rates shall be kept at current low levels. While employment and housing data shall see gradually improved statistics, US Dollar shall be weak for a few more months. Gold price shall continue to attract investment demands as “safe haven” factor shall still be a key support for gold price’s upward trend. Overall markets expectations for gold price to break above USD1400, and investors shall be coming in when pullbacks happen each time.
Summary:
Goldtrades.Info forecasts gold price’s rally to continue, and as long as gold price is increasing by a step-by-step pattern, a new historical peak could be reached at 1420-1450.
2010 Q3 Gold Price Trend Forecast:
28 July 2010
Q3 2010 Outlook On Gold Price Trend:
A Quick Summary of What Happened in Q2 2010 (A Rally Season):
Gold price entered a technical rally season in Q2, since start of April, gold price was on a uptrend. Rising from USD1112.8 (1 April 2010) to USD1265 (21 June 2010), rising more than USD150.
This matched our forecast of a rally in Q2 2010.
Gold price went up into the area of 1160 – 1240, then came back down to 1176, and was up until hitting 1265 (Historical Peak).
Fundamentals that affected gold price in Q2:
Fundamentals also supported gold price to stay on the uptrend momentum. Gold was seen as a safe haven, as European debts were causing serious concerns in the markets, US companies posted weak results, and Euro was trading weak against the USD. As investors were concerned with markets recovery, they turned to gold as an alternative investment. Thus giving gold price strong momentum to stay above 1200.
Technical that affected gold price in Q2:
Technicals were strong in Q2, gold price was on a continuous uptrend.
Gold price broke above several key resistances: 1149, 1160, 1176, 1194, 1203, 1216, 1226, 1245, 1255, and reaching 1265.
Q2 Peak: USD1265
Q2 Low: USD1111.5
Q2 Main Trading Range: USD1176 – USD1240
Now, Going into Forecast for Gold Price Trend in Q3 2010 (A Technical Corrections Season):
Q3 2010 is expected to be a technical corrections period. After Q1 as the corrections period, Q2 was a rally period, and we expect Q3 to be entering a technical corrections period. Downside pressure started when gold price fell below 1217-1226 support area.
Looking at the 2010 Chart Below:
While we still remain bullish for gold price in 2010, we believe that Q3 2010 will see gold price entering a technical corrections season. As the long term chart below shows that historically, Q1 and Q3 are technical corrections seasons, and Q2 and Q4 are rally seasons for gold price.
Gold price weekly chart - 28/7/2010
Q1 was a corrections period, after Dec 2009’s peak at 1226, gold price bottomed at 1043 in Feb 2010, a 14.9% correction. Q2 was rally period, low price was 1112.8 in April, and peaked at 1265 in June, a 13.66% increase.
For Q3, if gold price sees a 10% correction from 1265, then we could expect price to be at bottom near 1140.
Looking at the Daily Chart below:
The corrections channel indicates gold price has entered a technical corrections period. We forecast Q3 season will be seeing gold price trading mainly between 1160 – 1217. Selling pressure would take gold price down to test 1140-1160 area.
Gold price daily chart - 28/7/2010
Red lines - Support Price Levels Green lines - Resistance Price Levels
Q3 has undergone a step-by-step correction. Since start of July 2010, gold price fell through key areas of: 1265 – 1255, then 1255 – 1240, 1240 – 1226, 1226 – 1217, 1217 - 1193, 1193 – 1180, 1180 – 1160.
Key support levels at 1150, then 1140.
Critical horizontal support at 1124.
Gold price shall be searching for a bottom price during July and August, and we could see range tradings between 1160 – 1180, the 1180 – 1200, and 1200 – 1217. 1226 is a key resistance in Q3.
We do not forecast gold price to be re-entering the 1226 – 1240 area in July and August. And gold price shall be trading at the 1140-1160 area, looking for strong support.
However, if gold price fails to find support at 1140, then it could see further downside to test 1124 for support.
Important factor is, if gold price fails to stay above 1124, then we could see a collapse of the upward trend, gold price could go back to test 1000 key support price.
But, we remain bullish for gold price in 2010, and expect this correction to be bottomed at 1124 – 1140. Then gold price shall be climbing back up step-by-step, and preparing for another rally in Q4.
Key support areas for gold price in Q3: 1160 – 1180, 1140-1160,
If gold price fails to find support at 1140, then next key support area is 1124 – 1140.
Critical horizontal support for gold price in Q3 is 1140, the 1124.
Caution: if gold price fails to find support at 1124, then it could see aggressive selling pressure bring price down to 1000 – 1100 area. This could lead to a collapse of the upward trend for gold price in 2010.
Key resistance areas for gold price in Q3: 1217 – 1226, 1226 – 1240, then 1240 – 1255.
Fundamentals have little impact on gold price in Q3 in July 2010. Unlike in Q2, when fundamentals supported gold price to see upward momentum. However, in Q3 technicals shall be playing key impacts on gold price. When selling pressure is strong in a corrections period, even when we see strong fundamentals that would normally support gold price to go up; this will not necessarily be the case in Q3.
2010 Q2 and Long-term forecasts on gold price trends (LLG)
8 April 2010
2010 Q2 Outlook on spot gold price trends:
A quick summary of what happened in Q1 2010 (a technical correction season):
The price of gold entered a seasonal correction period in Q1 of 2010. After reaching USD1226 (historical peak) in Dec 2009, gold came back down in Jan 2010. The price of gold was mainly traded in the area of 1085 – 1140 in most of Q1.
During Q1, gold price pulled back into the 1080 – 1100 area, and after tested for support, it moved up to attempt to break 1125 – 1140 area. But unsuccessful, as below chart shows that gold price attempted to stay above 1140,but failed several times. Then gold price subsequently came back down to the 1100 – 1125 area.
Q1 Peak: 1161.7
Q1 Low: 1043.7
Q1 range: 1085 – 1140
Q1 narrowed range: 1100 -- 1125
The chart below indicates:
Red lines: Q1 trading range: 1085 - 1140
Green lines: Q1 narrowed trading range during most of Feb and Mar 2010 : 1100 - 1125
Gold price chart Q1 2010 trading ranges:
Fundamentals affected Q1 prices:
It is interesting to point out that: gold price was not always in positive correction with Euro vs USD trend lines in Q1, even when Euro was falling sharply against USD due to Greece debts, gold managed to find some support and the percentage drop in gold price was not as significant as the fall in Euro. At times, when the USD index was trading low, gold price did not find much strength to break about resistance levels such as 1125, and 1130 – 1136 areas. However, there were times such as in March 2010, when Euro was trading weak, gold price did fall back into the 1094 – 1104 area for some time.
Technicals for Q1:
Gold price did find strong support at 1100 as most of Q1 gold price did manage to stay above 1100 level. But lacking the strength to stay above 1125 for most of Q1.
And the lowest for gold price was USD1043, and at times we were concerned that if gold price would fall below USD1000, then the long-term upward trend for gold price would collapse. Fortunately, gold price did not go anywhere near USD1000.
In our view, gold price was going through a technical correction season in Q1, as we had mentioned in our previous weekly reports many times.
Now, going into Q2 of 2010 for forecast of gold price trend:
We remain bullish for long-term gold price trend, and forecast a move into USD1320 – 1360 area in 2010.
If history repeats itself, after Q1’s seasonal correction, Q2 should be a rally season for gold price.
Fundamental supports for Q2:
Interest rates will remain low in Q2, as US Fed had mentioned in its report in March 2010 to reassure there is no immediate needs for raising rates. USD shall remain weak for sometime, US labour market and debts remain key concerns of a US recovery. Gold remains as an attractive alternative asset for investors including central governments. Central banks typically hold gold as a portion of their reserves. If central banks engage in net buying of gold this can drive spot prices up. Traditionally, gold has been used as a hedge against the falling dollar. The idea behind this trading is that gold is an alternative to currency that is not as strongly influenced by any one economy. The relationship between gold and currency is an inverse one. In addition to this, as gold is often quoted per ounce in US dollars, investors with alternative currencies may find that their native dollar stretches further with more value when the US dollar falls.
On the technical side for Q2:
Looking at the chart below, we can see that traditionally, Q1 and Q3 are seasonal corrections periods, and Q2 and Q 4 are rally periods. 2008 Q2 , 2009 Q2 – gold price rallied. If the same trend applies, 2010 Q2 should see another rally.
Gold price chart - weekly chart 8 April 2010, with 2010 Q2 forecast:
At the end of March 2010, gold was trading between 1104 – 1114 for a few days, then moved up to breaking 1118 minor resistance, and on the 1st April 2010, gold price broke 1125 and reached 1153 on the 8 April 2010.
(please go to below for our “Long-term forecast for gold price trend” )
If gold price is to get on a rally as forecast, it has to find strong support at 1125 – 1140 area. Then will be moving to test 1160 – 1180 area for resistance. 1160 is a critical horizontal resistance for gold to break in order to confirm a rally. If 1160 – 1180 shows support, then gold price could attempt to break 1200 level.
Initially we forecast gold price to be trading between 1125 – 1160 at the start of the season, and if gold price can break the 1160 resistance, next move will be into the 1160 – 1180 area. And, if gold finds support at 1180, then a further attempt to reach 1200 level.
On the other hand, if gold price fails to find support at 1125, we could go be back into the trading areas of Q1 in 2010.
Key areas for gold price in Q2 : 1125 – 1140 , then 1160 – 1180, then 1180 - 1200
Critical horizontal resistance : 1145, 1160, 1180, 1200 (see above chart)
Cautions: gold price has to break above some critical horizontal resistance in order to confirm a rally.
If it fails to stay in the 1125 - 1140 area, it could be returning to the Q1 areas.
Support areas for gold price in Q2 : 1110 - 1118, 1100 - 1108, 1094 - 1104, 1085 - 1090
At the start of the season Q2, gold price moved up from 1125 to 1153 ( a USD30 rise ) on the 8 April 2010. This could be a good sign to suggest a start of a Q2 rally. However, as mentioned before, gold price must be testing for strong support at 1125 – 1140 area, before a rally can be confirmed.
We remain bullish for Q2 and forecast a rally for gold price into the 1160 – 1180 area. And should technicals hold, 1200 could be achieved.
Long-term forecast for gold price trend:
17th March 2010
The long-term forecast, for 2010, gold price remains up. We expect gold price to be breaking the all time peak of US$1226, possibly reaching US$1320.
Looking at the chart below, medium term (we mean next 6 months) and long-term (4th quarter of 2010). Gold price remains bullish.
The gold price reached US$1000 in December 2008, and US$1226 in December 2010. However, the 1st quarter for gold price was a correction period. Trading mainly between 1050 – 1150 area. Once this seasonal correction is over, we expect gold price to be back on a rally, as long as gold price stays above the resistance area of 1145, we forecast gold price to be entering the 1160 – 1200 area.
The key factors for supporting gold price to be bullish remain in low US rates, and as the Fed announced on the 16th March 2010, rates shall remain at its current low levels for quite some time. We expect rates to be unchanged until the 4th quarter of 2010.
While we remain cautious as to how long the current correction period will last, medium term, we are neutral, but we are bullish for the long term.
On the fundamentals side:
In a report by the World Gold Council Jan 2010, “Experts predict that 2010 will witness a stampede towards gold-investment. This is due to investor fears regarding inflation, bad economic situation and the weak dollar value. During economic growth, there are all the chances of inflation. Investors turn to gold-investments in order to counter act the impact of inflation. In fact, inflation and fear of inflation both have a good effect on gold generally. The uncertainty in global economy is also a contributing factor to the increased gold demand. Some of the gold market experts predict that gold-prices will be rising $1100 to $1300 an ounce by the end of year 2010. Looking at the history of goldbullion, we can see that bullion has increased in value and price pretty significantly. From $255 an ounce in year 2001, the price of gold quadrupled to more than $1100 an ounce. Due to this trend, gold has become the trade of the decade. Hence, if the same trend continues, who knows where the price of gold will land up in the future? It is worth mentioning that no clear statement can be given regarding the price of gold, as it depends on variables such as dollar rate and economic conditions. Year 2009 did set up new average high for ingot at $1,088. 2010 seems even more promising. In the previous year, central bank bought enormous amounts of gold. This was the first time in the past 20 years that central bank was a net buyer of bullion rather than a net seller of ingot. In 2009, the US budget deficit soared to $1.4 trillion. There is growing anxiety over budget deficits, economic instability and risks of inflation; all the reasons for investors to turn to bullion. ” Source: http://ezinearticles.com/?World-Gold-Council-Forecasts-For-2010&id=3741146.
On the technical side:
(1.) Long-term gold price trend chart (17 March 2010):
Looking at the 5 year trend lines, resistance and support levels, gold prices sees an upward trend. Gold price right now (17 March 2010) is at the upward momentum area (see below chart), and our forecast is gold price will stay in this area for most of Q1, and will have a chance to move back to 1160 - 1180 - 1200 in Q2, and another medium term correction in Q3. And a development of another all time high in the range of 1300 - 1360 in Q4.
Long-term gold price trend chart:
(2.) Medium term chart, in Q1 2010 (17 March 2010):
We can see gold price has entered into a correction period.Gold price reached US$1226 in Dec 2009, then came back to the 1066-1100 area in 2010 Q1. Gold price has been moving between 1110 and 1145 area for most of Q1. For gold to enter a rally, it has to break above the Q1 medium correction area (see below circled area).
As long as gold price stays above the 1100 - 1110 area, gold price, after a medium term correction can be expected to get back to the 1160 - 1180 area.
However, we expect another medium correction before gold can see 1226 - 1300 area.
In 2009, we saw 2 seasonal corrections in Q1 and Q3,and gold finally reaching all time high in Q4. If a similar pattern develops for the gold price trend in 2010, then we could expect a mid-year peak, and targeting for a new all time high in Q4 2010.
For gold price to get back on a rally, it has to stay well away from the 1047 - 1097 area. If gold price re-enters this area, then we may see a reverse downtrend and testing the 1000 support. However, on the technical side, this is unlikely. But we must remain cautious to pay special attention to the fundamentals side. Recent European debts problems took gold price back down to the 1070 - 1090 area.
Medium-term gold price forecast chart (17 March 2010):
Medium term support areas for gold price:
1095 - 1115
1070 - 1090
1045 - 1060
1005 - 1025
950 - 990
Medium term resistance areas for gold price:
1125 - 1145
1160 - 1180
1185 - 1200
1203 - 1226
1228 - 1250
1262 - 1282 Back to top
by: This e-mail address is being protected from spambots. You need JavaScript enabled to view it 17March 2010
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