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My Mid-Term Outlook for Gold
Gold's monthly chart has already formed a death cross, while the first green MACD histogram bar has appeared. After the sharp decline in June, a technical relief bounce during July is possible.
Even so, I don't expect a major bullish breakout during July, August, September, or October.
In my view, there are two possible scenarios:
Scenario 1:
Gold consolidates above $3,900 for around four to six months, trading within a relatively tight range. This would be the more favorable outcome for retail investors, but I believe the probability is relatively low.
Scenario 2:
Gold continues to decline, creating a slow and prolonged bearish environment. It could repeatedly test or even break below $3,500, before staging a sharp rally toward $4,400, catching both bulls and bears off guard. This would likely be followed by four to six months of high volatility before the trading range gradually tightens.
I consider this second scenario to be the more likely outcome.
The $3,900 level is a major psychological and technical support. A decisive break below it could signal a trend reversal for many trend-following traders, prompting them to exit their positions.
Although there are several support levels along the way and many reasons to buy the dip, I believe the strongest support lies around $3,500, where gold spent nearly four months consolidating last year.
My Strategy
- If the first scenario plays out, I will remain patient, wait for the consolidation to finish and a confirmed uptrend to develop, then gradually build long positions.
- If the second scenario unfolds, I will look to accumulate near $3,500. Once the consolidation is complete and a new uptrend is confirmed, I will add to my position.
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