Gold price prediction 2015: A gold "flash crash" shook markets July 19, sending the metal down $50 an ounce in a matter of seconds to its lowest level since 2010.
But the tumble didn't stop there. In fact, last week's events were so dramatic they necessitate an updated gold price prediction for 2015.
"Gold's hard-and-fast tumble below $1,100 an ounce last week means some investors may be tuning out the yellow metal or suffering from gold 'burnout,'" Money Morning Technical Trading Specialist D.R. Barton, Jr. told readers July 27. "But ignoring it is a huge mistake. It has been and always will be one of the best stores of value, and it's a crucial hedge against economic upheaval. It's a must-have holding."
Here's exactly what happened to gold last week - and our new gold price forecast to make the yellow metal work for you in coming months...
Gold "Flash Crash" Aftermath
Just before 9:30 p.m. ET on Sunday, July 19 - or just as China's market opened for trading - someone dumped five tonnes ($2.7 billion worth) of gold on the Chinese market. That's the equivalent of one-fifth of a whole day's trade in a normal session. The gold price per ounce promptly fell to a five-year low of $1,088.05 an ounce.
Bullion lost more than 3% last week after the gold flash crash sparked more sell-offs. The metal fell as low as $1,077 by Friday, July 24 - its cheapest price since February 2010.
Holdings in the SPDR Gold Trust ETF (NYSE Arca: GLD), the world's biggest gold-backed exchange-traded fund, fell for a seventh day in a row to 21.87 million ounces on Friday. That marks GLD's lowest level since September 2008.
And U.S. government data released Friday showed speculators had turned bearish on Comex gold for the first time since at least 2006 in the week ending July 21 (the week of the flash crash).
"Last Monday's 'bear raid' in Shanghai brought gold down to 13-year lows before settling at five-and-a-half year lows, and it's absolutely vital that we know when this downward pressure will stop so that we don't 'call a bottom' too quickly," Barton said.
You see, after last week, the key to any accurate gold price prediction for 2015 is finding gold's bottom - and of course, its subsequent march back up...
When Will Gold Go Up?
Gold has been in a five-and-a-half year bear market - and every turn up during this tumultuous time has excited the "gold bugs," only to lead to disappointment time and again.
While there will be many excellent trading opportunities in gold in the near future, Barton warned that trying to hop on a renewed long-term trend for a multi-year trade or investment opportunity will require some patience - and some technical guidance.
"From a technical perspective, trend lines are one of the best tools to guide us in discerning when a bear market turns back into a bull," Barton said.
For example, Barton looked to the SPDR gold ETF to see where the current critical trend line hits:
"As long as price stays below this line, the gold bears rule," Barton said.
Barton also looked to spot gold trend lines and identified $1,000 as the key bottom for gold prices in 2015...
The spot gold chart reflects the current cash price that physical gold is being bought and sold for on the world markets.
"We'll look at that same springboard level that is about 4% below current gold prices and also at the next important resistance level below that, the $1,000 price level," Barton said.
"A word to the wise - don't dismiss the notion of round numbers as key zones," Barton said. "Many studies, including several of my own, prove definitively that round numbers are key reaction areas for financial instruments. And $1,000 per ounce is a huge one for gold."
Barton added that from a technical perspective, these key levels below where gold is trading should attract price "like a magnet."
"If either of the key levels shown in the charts above holds, they could prove to be important turning points for gold in the coming weeks and months."
The Bottom Line: In our latest gold price prediction for 2015, we've identified $1,000 as gold's new bottom. Remember that the yellow metal won't stay in the bear run forever - it just seems that way right now.
"Patience is required, but keeping an eye on the key technical levels described above will allow you to have a framework for navigating this market," Barton said.
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