The gold market appears to be at a critical juncture that could determine whether prices will hit all-time highs or enter a new long-term bear market, according to one market analyst. However, gold has a chance to hit $2,000 this year, according to Bloomberg Intelligence’s March outlook.
“Gold created a consistent stair-step pattern”
Jesse Felder, creator of the Felder Report, states in his latest gold commentary that gold has formed a fairly consistent ladder-step pattern that dates back to the late 1990s. Felder underlines the following points in his comment:
Prices rise until they reach a ceiling, indicated by a descending trendline, at which point they consolidate for a while. In bull phases such as those seen from 2002 to 2011, these consolidation periods do not sustainably violate the previous trendline. However, they do this in the moon phases.
“There is more plus potential for precious metal!”
Although gold prices have recently dropped from a nine-month high in January, they are still at the upper end of the broader consolidation channel. Felder’s analysis states that the January rally will be the third test of wider resistance at the $2,000 level. In this context, Felder says, “If the bull period that started in 2016 continues, gold prices will explode and reach new, record highs.”
On the downside, the support level to watch comes in just above $1,600. Conversely, a sustained drop below recent lows indicates the start of a new bearish phase, according to Felder. Looking at the risk-reward scenario, Felder notes that he sees more positive potential for the precious metal. In this context, he comments, “The longer inflation stays high and the Fed stays behind the curve, the greater the chance of resistance to a breakout.”
“There is a chance for gold!”
According to Bloomberg Intelligence’s March outlook, the best chance for gold to reach $2,000 this year is for the US economy to enter recession. cryptocoin.com As you follow in , the surprisingly strong economic indicators at the beginning of the year weren’t convincing enough for some analysts to clear a recession immediately. And markets were startled by strong employment, persistent inflation and strong retail sales and January’s PMI data. Fear is longer-term interest rates and the Fed’s return to 50 basis points hikes.
In its latest March outlook, Bloomberg Intelligence warned that copper and other industrial metals will outperform gold this year if the US manages to avoid a recession. However, this scenario is highly unlikely as the Fed continues to be aggressive. Mike McGlone, senior macro strategist at Bloomberg Intelligence, said on Thursday:
The potential for the biggest economic contraction from the yield curve in nearly 30 years and the Federal Reserve still tightening could cause most metals to fall and gold to rise in 2023.
The most important catalyst to raise gold above $2,000
McGlone points out that gold is in a persistent bull market despite falling prices in February. Spot gold is down more than 5% in the last 30 days. But the decline came after the precious metal saw its best start to the year in more than a decade. The precious metal may soon be ready to continue its rally, but the critical catalyst that should trigger this is a recession. McGlone explains his views on this issue as follows:
A US recession is the most important catalyst that could push the yellow metal’s price above $2,000. It is based on the highest probability of recession according to the quarterly to 10-year Treasury curve in our database since 1992. An important factor that could be different this time around is the easing of the Fed, which markets are accustomed to until 2022 inflation.
This scenario includes gold continuing to outperform other metals in 2023. “The precious metal, one of the best performers on a 12-month basis, may be smelling an eventual Fed pivot due to the recession,” McGlone says. A US recession and higher gold prices remain Bloomberg Intelligence’s key case for this year.
