Gold's Outlook CPI Data / Commodities / Gold & Silver 2024

The CPI data isgoing to be released today, so the markets are tense.

Gold'sGains Limited by Short-Term Resistance

Gold moved slightly higher, but thevery short-term resistance line based on the previous highs keeps gold’s gainsin check.

The fact that goldalready confirmed the breakdown below its rising wedge channel makes the following declines likely from the short-term point of view.

And from the medium-term point of view, we get similar (but stronger) indication from thecurrent seasonality. Afterall, we’re after the U.S. Labor Day.



The bearish implications of thisimportant point in time haven’t played out yet,but it doesn’t mean that they are any less likely to take gold lower in the following days or weeks. As I wrotepreviously, gold price doesn’t have to decline immediately after Labor Day – itcould trade sideways for some time, and then decline in a meaningful way.

It’s not the exact timing that has been so consistent over the previous years, but the importance of thedeclines that (sooner or later) followed.

Given the similarity that we see in the MACD indicator (bottom of the above chart) to the 2020 and 2016 tops and the factthat those two years were also the U.S. presidential election years (just likethe current year), it seems that we can expect much lower gold prices in thefollowing weeks and months.

GDXJ PatternEchoes Previous Declines

Let’s see what the GDXJ did in thoseyears.



Of course, it declined. What’s not soobvious before one looks at the above chart is that those Labor Days were thestarting points (approximately – the tops actually formed earlier, just like ithappened this year) of really big declines in the junior mining stocks.

In particular, the 2016 case seemssimilar as the GDXJ is trading at very similar price levels (note the orange,dashed lines). If history rhymes, then we can expect the GDXJ to decline to its2022 low or so. That would be an almost $20 downswing – a truly powerful one.

Now, in those two years, the stock marketdidn’t decline, and it’s quite likely to decline this year. This means that thedeclines in the GDXJ could be bigger than what we saw in 2016 or after the 2020top. After all, the above chart includes one case when stocks plunged – inearly 2020 during the Covid/lockdown scare – miners declined very fast in thiscase. The same was the case in 2008 when stock plunged.



On a very short-term basis, we saw arebound, which took place right at the triangle-vertex-based turning point. Ipreviously wrote about the possibility that GDXJ could decline to about $40 andperhaps bottom there (for a short while) at this turning point (yesterday), but instead another – also probable – scenariohappened. We got a small rebound.

This doesn’t change the fact that the twosupport lines and the 50% Fibonacci retracement still provide a quite strong(but short-term only) support at about $40, so we might get a rebound when GDXJmoves to this level.

Then – as I discussed above – minerswould be likely to decline once again.

Naturally, the above is up-to-date at themoment when it was written. When the outlook changes, I’ll provide an update.If you’d like to read it as well as other exclusive gold and silver priceanalyses, I encourage you to sign up for our freegold newsletter.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Toolsfor Effective Gold & Silver Investments - SunshineProfits.com

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