Gold Forecast – Gold Prices Nearing Major Buy Signal

In this article, I will lay the groundwork for the next low in gold and touch on the emotional pitfalls we face as investors. Why is it that most traders sell when they should be buying and buy when they should be selling?

The Intermediate Cycle

Gold goes through the same process (rally-top-decline) approximately every 6-months. With each phase, there are various emotional benchmarks that drive sentiment. Becoming aware of them could make you a better investor.

Emotional Barriers

Near the Cycle Top: Retail traders are loaded with out of the money (OTM) call options and are perilously overleveraged. They only read articles that confirm their outlook (confirmation bias). They devise reasons why prices can only go higher (fear of missing out).

Bearish Breakdown: A bearish breakdown or recognition day arrives when critical support is violated, and retail traders rush to the exits to preserve profits or limit a mounting loss. Often extreme selling morphs into a panic. I outlined the current breakdown in my Gold Forecast: The September Breakdown in Gold is Beginning.

Near the Cycle Bottom: Everyone that was once bullish is now finding reasons why prices will continue to drop. They read bearish-article-after-bearish-article expecting lower prices. They finally snap and sell at a loss or open bearish positions. Prices bottom a few days later, and they are caught on the wrong side once again.

Why does this blatantly obvious pattern repeat? The answer is simple – Humans Nature. Humans are too emotional not be affected. I got tired of making the same, emotionally driven mistakes, and created the Gold Cycle Indicator. It simplifies the investing process, and when it turns green – I look to buy.

Gold Price Target

I believe gold is dropping into the next intermediate low. Prices should bottom in late September or early October. Our Gold Cycle Indicator is expected to reach the green zone as the cycle bottoms.

The Bearish Breakdown is underway, and prices should enter our cycle target window ($1725 – $1810) by late September or early October.

The Gold Cycle Indicator finished Wednesday at 182. It continues to work its way towards minimum cycle bottoming (green zone).

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more, click here.