What is the gold price forecast for 2016 going to be like? In this post, I share my thoughts about the gold price and where it might head in 2016 and even in 2017.
These will be based on looking at technical analysis of gold chart and also looking at the current marco economic conditions that are impacting gold price.
Long Term Gold Price Forecast For 2016-2017
The chart below is the monthly chart of Gold as seen in 23rd June 2016 after the Brexit Vote happened in which Britain voted to leave European Union.
A few things to note:
- The Brexit Vote caused the price of gold to shoot past the 1300 level and head up as investors looked for a safe haven to keep their money.
- now that the 1300 level has been broken, the next obstacle to break would be the downward trendline. Based on economic uncertainty, I really do think that this trendline will be easily broken to the upside.
- the next significant price level would be the 1500 level and if economic conditions do not improve and if US does not increase interest rates, expect price of Gold to shoot up to the 1900 level.
Monthly Gold Price Forecast June-August 2016
This chart below is the weekly gold price chart. It contains the same kind of information as seen on the monthly chart above but this time, we are zooming in to take a closer look.
For the month of June, July and August, there’s enough catalyst to keep pushing gold price up.
It may find support on the 1300 price level and use that to bounce up to the 1500 level or it can continue to head straight up to the 1500 price level.
Here’s what can be noted on this chart:
- gold has broken past the 1300 price level already.
- the breakout of the trendline would see price heading up to the 1500 level which will provide some form of resistance for the gold price.
- should the gold price reach the 1500 price level, you should monitor the current economic climate, especially the conditions in Europe and also if the US economy is improving or not. Worsening conditions will only push gold up past 1500 level heading up towards the 1900 price level.
Fundamental Factors Impacting Gold Price
- Japan’s and Europe’s monetary policy in shambles
- FED is looking like its tightening cycle is over before it began.
- Brexit Vote happened on June 23rd 2016…this may be a catalyst for other EU nations to follow suit to pull away from the European Union which means more grief for EU which means investors will rush to gold.
Therefore, when you all these factors, its is no wonder that gold is attracting a lot of attention and it is being pushed higher as I’m writing this.
Gold Price Technical Analysis 13th-17th June 2016
But given the fundamental factors above that are driving the price of gold up at the moment, gold has one big obstacle to overcome: the 1300 price level.
Have a look at the weekly chart of gold below and you notice 3 things immediately:
From the gold price chart above, on the first arrow, you can see that in early 2014 gold tried to breakup past the 1300 level but was pushed down and that was the start of a downtrend.
That downtrend ended in Nov/Dec 2015 2015 and gold started shooting up.It peaked in March around US$1,300 an ounce (second arrow), just below the January 2015 high.
What happened after January 2015 was the FED’s talk about increasing interest rates that saw gold sell off sharply.
But then it found support at 1200 level and for the last 2 weeks, it has been climbing up since.
Will Gold Break Through The Resistance?
That I cannot tell and I bet no-one can say for sure. I think it will given the current climate but who cares about my opinion, its just an opinion which everybody is entitled to have one.
What matters is what the market will do. What the market will do will be reflected in the price action.
Why Is The 1300 Gold Price Level Important?
Well, if gold trades above 1300, that in itself will be the highest close it have in almost 2 years. So tell me, is that a bearish or bullish sign?
When that happens, it will attract more money into gold from other asset class and the results will only make the gold bull momentum increase.
If gold does not break the 1300 level, then it may get stuck in a trading range between 1300 & 1200.
Global Economy Outlook And Gold Price
The fact that the global economy is fragile and the ideas that are being thrown around to make it work are really heading nowhere, there’s a high probability of gold price to continue heading higher.
Keep an eye and ear out for more hint of weakness in the US economy…if that happens, that means interest rates rises in US will canned and that is good for gold.