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Gold Forecast 2013: Accelerating Long-Term Trend

Our weekly commentaries provide Euro Pacific Capital's latest thinking on developments in the global marketplace. Opinions expressed are those of the writer, and may or may not reflect those held by Euro Pacific Capital, or its CEO, Peter Schiff.
Dima Kash, Associate
Wednesday, November 28, 2012
Gold is experiencing an accelerating trend, represented by a difference in the price level between the 50WMA and 200WMA. The price gap between the two averages is plotted below, overlaid with a curve which visually demonstrates its exponential growth rate.
An accelerating trend has resulted in a gold market which has made new highs every year since 2001, while doubling in price every 4 years. The following table displays maximum yearly prices for the yellow metal:
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Yearly Highs ($/oz) 296.0 351.5 418.4 458.2 543.0 728.0 848.0 1,033.9 1,227.5 1,432.5 1,923.7 ?
In 2012, the question remains whether we will we see this pattern of higher highs continue. So far the high for this year has been $1,798.1/oz, or 7% below the 2011 high. With a little over a month remaining before the end of this year, there is definitely a chance that we could see a strong year-end rally. If we do not break above $1,923.7/oz by the end of this year, we would expect the breakout to occur on or before Q1 2013 (Milestones Section – Page 6).
In keeping up with the long-term trend, the following table identifies support and resistance levels which are deemed of critical significance. They represent key junctures in gold’s price action and ultimately define the trend’s direction.

Level Type Support ($/oz) Resistance ($/oz)
Critical 1) 1,364* 2) 1,530 1) 1,800

The first level of critical support is the exponential 200WMA, currently at $1,364/oz. Since gold has not touched this moving average in over 10 years, its violation would signal a fundamental change in the market’s behavior. If there is a line in the sand to be drawn between bulls and bears, the 200WMA would
be it. A break below the 200WMA would serve as bearish confirmation for as long as prices remain below this average.
The second level of critical support at $1,530/oz is based on gold’s current sideways consolidation, which was been in place since September 2011. This level is critical because it has been tested three times over the last 13 months and held on all three occasions.
Completing the consolidation range is a critical level of resistance at $1,800/oz, which has also been tested three times and held successfully on each occasion. The following chart plots critical support and resistance levels, including the exponentially rising 200WMA.

Read the complete analysis here >> 

    • Accelerating Long-Term Trend
    • Range Bound Intermediate-Term Trend
  • FORECAST: 2013
    • Methodology
    • Assumptions
    • Price Target Analysis
    • Milestones
    • 2013 Forecast Chart


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