Start the conversation
Gold's strong negative sentiment may have finally run its course.
Going back to early April, the price of gold has lost a total of $110. The relentless selling pressure lasted close to three months.
A counter-cyclical rally in the U.S. dollar, leading to a rise in the U.S. 10-year Treasury, attracted safe-haven money to cash over gold.
But the dollar's rally also looks to have run its course. In the past week, the U.S. Dollar Index (DXY) has given back over 100 basis points. The 10-year Treasury yield is also 28 basis points lower than its peak in mid May.
And the release of June U.S. Federal Reserve minutes on Thursday was revealing. Some Fed officials voiced concerns that more rate hikes could cause the yield curve to invert and that if trade wars take hold, they'd want to be more accommodating.
Trade threats appear to be the prime concern. So now the certainty of two more rate hikes this year has come into question. That helped cause the dollar to sell off, removing a considerable speed bump in the way of gold's rise.
Now it looks like we've hit gold's bottom, and momentum has shifted positive. With a higher seasonal trend on its side, we could see gold pop and quickly regain its highs of this year.
Given how gold stocks are reacting, we have another indicator of a possible run-up from here.
Before I show you my newest gold price forecast, here's how the metal is trending…
How the Price of Gold Is Trending Now
Gold just kept trending lower as the last trading week started. It opened on Monday, July 2, at $1,249 and sold off into dollar strength, which took the DXY all the way up to 95.10. Gold touched $1,240 before closing at $1,242.
Must See: This method may be the only way in history to turn a small sum of money into $100,000 without batting an eye. Read more…
Then in the early morning hours of July 3, gold touched an intraday low of $1,238 before reversing. It hasn't looked back since. The precious metal then rallied strongly to a $1,256 peak at midday, likely helped by short covering, then reversed slightly to close at $1,252.
After touching a high of $1,260 early on July 4, gold dialed back to about $1,256. The $1,251 level would only be tested on Thursday morning as the markets anticipated the release of the Fed's June meeting minutes.
Here's the DXY's action of the past week:
Gold's dip ahead of the Fed minutes was short-lived. It touched $1,251 then rallied to close at $1,257, likely encouraged by Fed members' reticence toward future rate hikes, caused by concerns about trade wars.
And as we entered Friday, strong jobs numbers lifted stocks as the DXY drifted sideways, down at 94 most of the day. Gold bounced in a healthy range between $1,253 and $1,256, hovering at $1,255 by late afternoon.
Now that gold prices have appeared to bottom out, here's where I see them heading…
Here's My Newest Gold Price Target
About the Author
Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.