Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Price Is ALMOST Ready to Rally

Commodities / Gold & Silver 2023 Feb 26, 2023 - 10:29 PM GMT

By: P_Radomski_CFA

Enough is enough. No market can decline without correcting every now and then. And both gold and the USDX point to an upcoming reversal.

Let’s start with gold.

Is It Over?

Looking at its price from a short-term point of view, we see that it paused for a brief moment at its 38.2% Fibonacci retracement level.

And then – after the pause – gold declined.

Not only that – it declined below the 38.2% Fibonacci retracement and below the intraday December 2022 highs. This breakdown is not confirmed, but since we did see a daily close below those levels, it’s more confirmed than it was before. Consequently, we just saw another indication that gold’s decline is not over yet.

On the other hand, if you look at the RSI indicator in the upper part of the chart, you’ll notice that it’s just above the 30 level. This means that it’s probably (if gold declines some more) about to move below 30 or right to it, thus flashing a buy signal.

As a reminder, after a similar decline (in May 2022), gold kept on declining until the RSI touched 30. We’re very close, but not there yet.

Well, to be 100% precise, the RSI is close enough to 30 to be viewed as something that might work on a near-to basis, but combining this with gold’s breakdown below the 38.2% Fibonacci retracement level makes me doubt that this is already a buy signal.

This means that what I wrote in my analysis last week remains up-to-date:

“So, will gold bottom at $1,800 or close to it? It seems quite likely.

Will this be the final bottom? It seems very unlikely given how high real interest rates have rallied recently and how far they are likely to rally in the future.

Will there be no other corrections before gold hits $1,800? It’s unclear – we might see a rebound right now given that the 38.2% Fibonacci retracement was reached, but it’s unlikely that this rebound would be big enough for most people to really care about it. Remember the late-April and early-May 2022 corrections? We might see something of similar size and length.

All in all, while the biggest opportunity lies in the junior mining stocks right now, it seems to me that gold is likely to provide us with a decline that also might be useful for those who choose to position themselves accordingly and benefit from this move.”

Let’s keep in mind that in today’s interconnected financial markets, no market can truly move on its own. In particular, gold (well, it’s the same with silver and miners, too) can’t really move independently from the currency that it’s most often priced in – the U.S. dollar.

In fact, the U.S. dollar is one of the key fundamental drivers of gold prices (the other is the situation in real interest rates – which I discussed at the beginning of February).

Where Is the Dollar Going?

The USD Index has been on the rise this month after bottoming practically right at its cyclical turning point. As a reminder, the USDX tends to reverse close to the turn of the month (please note the dotted, vertical lines). This is not only important. It’s also timely.

The end of the month is just a few sessions away, which suggests that the USD Index might want to reverse its direction soon. The most recent move was to the upside, which would indicate that the next reversal will be a top.

Of course, this doesn’t indicate a change in the medium-term trend, which is likely to remain up, but it does point to a good possibility of seeing a pullback shortly.

This is particularly the case, given the similarity to what happened in mid-2021. I marked those areas with orange rectangles.

These were the times (now and then) when the USD Index declined while the RSI based on it moved between 30 and 50, and at the same time gold continued to rally. Then, after USDX’s bottom (and gold’s top), it kept on rallying until the RSI indicator moved to the 70 level. It was then that we saw a short-term top (and a short-term bottom in gold).

Interestingly, we have a resistance level nearby – the yearly top. It’s at 105.50 (the intraday high) and 104.83 (the daily close). Since currencies trade around the clock, it seems to me that intraday price extremes are more important than it in other markets, where closing prices matter quite a lot.

This means that it would be quite in line with mid-2021 if the USD Index moved up a bit more and topped close to the end of the month and close to the 105.50 level. This would likely make the RSI move higher (and perhaps touch the 70 level), too.

Moreover, please note that the size of the decline in gold (lower part of the chart, orange line) that we saw in 2021 (to the initial bottom) copied to the current situation points to a move in gold just a little lower before we see the final bottom – perhaps to $1,800 or so. Of course, this is in line with what the gold chart itself is “suggesting.”

All in all, it seems that even though the precious metals sector is still likely to move lower over the following months, we’re quite likely about to see a counter-trend rally. This rally is likely to provide a great opportunity for some traders (especially, if one focuses on mining stocks), but please make sure that trading such a move is in line with your overall strategy – not all moves are worth trading, after all.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the target for gold that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments -

Tools für Effektives Gold- und Silber-Investment - SunshineProfits.DE

* * * * *

About Sunshine Profits

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.


All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski Archive

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in