How low will gold go in 2017, ForexSQ financial experts conducted this article to know how the how low will gold price go in 2017.
How low will gold price go in 2017
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Gold prices plunged this month, just as expected, raising the question of how low they can go before turning up again for all commodity traders.
The reply to the question can’t be straightforward, as the question itself isn’t. No market moves in a straight line up or down, and gold’s decline will almost certainly be paused by corrective upswings before it is completely over.
Consequently, let’s first define, what is meant by “the bottom.” It is the price level that won’t be broken to the downside for the next decade or so and most likely ever.
We expect this kind of bottom to be formed below last year’s low at about $900, as is shown on the long-term chart, above.
The slide to this move is somewhat likely to be similar to the biggest decline that we saw in 2012 and 2013. After all, history tends to repeat itself.
If the pace of the decline is indeed similar, then we can expect the final bottom to be seen in the first part of next year. That is more or less in tune with the long-term turning points for gold (vertical lines), and it would correspond to the 61.8% Fibonacci retracement level based on the entire bull market.
Naturally, gold will likely not decline in a straight line — in 2012 and 2013 this wasn’t the case as well — and there will likely be bigger and smaller corrections. Where are they likely to start, and are they likely to be big or small?
Generally, the expected size of the bounce depends on the sharpness and size of the preceding decline, the strength of the support that would be reached, and the time gold spent consolidating before the move. Learn more about how low will gold go in 2017 below.
There is no doubt that this month’s decline in gold was sharp, and it reached only the first of the key support levels as of press time.
Because gold broke below $1,300, the next support levels are provided by Fibonacci retracements based on the 2015 to 2016 rally. At $1,250 there is also the support in the form of the June bottom.
The decline to this level was volatile. It is no wonder that this was the case. There are no meaningful support levels between $1,300 and $1,250, so we could see a more visible corrective upswing only after a move to $1,250, which happened last week.
After moving below $1,250, gold is likely to slide to about $1,200. The Fibonacci level there — it is at $1,212 — is close to the previous bottoms in March and May.
Because there are two recent bottoms at this level and they are also more prominent, this support is stronger, and thus this level could generate a bigger bounce, perhaps even back to $1,250 or so. But it depends on many factors, including whether there will be a bigger bounce after gold reaches $1,250 first.
If not, then the odds of a bigger bounce from $1,200 become much higher.
Finally, the $1,172 level provides the weakest resistance, as it isn’t accompanied by a confirmation from previous bottoms. Consequently, this level is least likely to generate a sizable rally, but it is important to emphasize that this is based on the data available and that the odds can change.
So, can we right away set up a detailed trading plan for the next several months?
Not really, as we only have indications about what is more likely to happen. But without seeing confirmations of some sort once gold approaches the specific price levels, it is too risky to say that opening or closing a trade will be justified at these levels.
In other words, it is likely that something very interesting may happen at these price levels, but we will need to be closer to the mentioned price levels to say more. Currencies, indicators, ratios, volume levels, etc., all need to be taken into account.
Based on the strength in gold, silver and mining stocks relative to the US Dollar Index, which just rallied substantially while there was almost zero reaction in gold and silver, we might see a bigger rebound right away. We have closed our short position in the precious metals and mining stocks as the situation became more bullish due to the above-mentioned reason.
Whether the following position is short or long will depend on the confirmations that we get.
Still, the upside seems rather limited, and the downside seems significant, so the odds are that sooner or later another short position in gold, silver and mining stocks will be justified from the risk to reward point of view. Investors should monitor the above-discussed support price levels and pay attention to confirmations that other signals provide.
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