“Gold going nowhere” seems to be a reasonable description of recent price action in the metals markets.
Below is a daily chart of GLD for the past year…
The price variation from the mid-point (170) of the price range (160-180) is only about 5 1/2 percent – either up or down.
For those expecting bigger things, this might trigger some impatience. It might also be disappointing.
Below is another chart. This one shows average gold prices monthly over the past five years…
The subtle downward slant to price action in the first chart now comes into clear focus. Gold is in a systematic decline dating back to its August 2020 high of $2060 oz. Prior to that, the gold price had been rising sharply for more than two years.
When the gold price broke below $1800 recently, it violated a rising uptrend line of support dating back to September 2018. You can see this on the chart below…
It would be easy to redraw the line of support by changing the angle; and things could turn around quickly at any time. However, there has been a shift in gold price action which has slowed the prior momentum and delayed plans for the big launch.
As far as “gold going nowhere slowly”, the gold price today is the same as it was three months ago, six months ago, nine months ago and one year ago. It is also the same as it was eighteen months ago – April 2020 – just prior to the summer run up to a new high at $2060 oz.
Whether you think the gold price will bottom out shortly (or has already), or whether you think there is more downside ahead, here are some things to keep in mind…
- Gold can go nowhere slowly for years at a time; even decades.
- Gold’s price reflects US dollar purchasing power loss after the fact – not before.
- Gold price volatility is much greater on the downside.
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!