The Gold Price Outlook as 2013 Ends

The long bearish journey of gold prices is about to take a pause.

Gold is expected to experience a short-term bullish correction before continuing its long-term bearish trend.

• Current Gold Price: $1,202.73
• Short-Term Target: $1,233, $1,250, 1,270, $1,320
• Stop-Loss: $1,179-$1,185
• Long-Term Target: $1,088

Before delving deeper into the future direction of gold prices, let’s first review the previous TCI signals for GBPUSD and GBPJPY.

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📶 The Previous TCI Signal of Trading Center

In the previous signal, TCI indicated a corrective bearish trend for GBPJPY. At that time, GBPJPY was trading at 167.591. After several trading days, GBPJPY dropped to 166.500 (December 17th), where demand for British Pounds strengthened, turning GBPJPY bullish once again.

🌍 Gold Price Fundamental Analysis

This analysis begins with an evaluation of the major fundamental factors affecting gold and concludes with a review of the current technical analysis of gold prices. 🔗More: » Gold Trading Information

🏦 The FED Tapering Policy is Set to Change US Markets

The Federal Reserve’s recent decision to reduce its tapering program (bond-buying) starting in January 2014 has caused increased volatility in the gold market. The Fed announced it will cut bond asset purchases from $85 billion to $75 billion per month. In upcoming TradingCenter analyses, we will explore this critical fundamental issue in more detail. In brief, the tapering reduction is expected to lead to a new phase of rising US interest rates, which will significantly impact US financial markets by causing:

1. Higher US interest rates

2. A stronger US dollar against major currencies

3. Falling commodity prices (including precious metals)

4. Declining US stock markets

Since US markets are interconnected with global markets, these effects are likely to spread worldwide, gaining momentum by the second quarter of 2014.

📝 Why Is the Gold Market So Sensitive to FED Bond Purchase Decisions?

Key points about gold’s sensitivity:

1. The Fed’s tapering signals a stronger US economy, which is negative for gold, traditionally seen as a safe haven during times of turmoil. As turmoil fades, gold’s safe-haven appeal weakens.

2. Gold pays no interest, so as US rates rise, investors may prefer assets that yield returns, reducing gold’s attractiveness.

3. A stronger US dollar, driven by tapering and higher rates, tends to push down commodity prices priced in dollars—gold included.

Long-Term Outlook for Gold Prices

Gold recently fell below $1,200 per ounce, signaling the start of a longer-term downtrend likely driven by both fundamental and technical factors. This downtrend is expected to accelerate in the first half of 2014, with an initial target near $1,087.

🔗 More: » Historical Price of Gold

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📈 The Gold Price Technical Analysis

Currently, gold is trading at $1,202.73. According to the latest price action, the technical analysis suggests a short-term corrective bullish phase. The initial target for this correction is $1,233, followed by potential targets at $1,250, $1,270, and $1,320. A recommended stop-loss range is between $1,179 and $1,185.

However, the first long-term target for gold remains at $1,087, as previously indicated.

Chart: MT4 Gold Chart (2002-2013)

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⚙️ What Does TCI Suggest About the Short-Term Gold Price Course?

The Trading Center Indicator (TCI) signaled a significant gold price reversal on December 19th, 2013. Currently, TCI stands at -9.28%, indicating that gold is in a short-term oversold condition.

To provide context, the historical TCI chart for gold—from January 1st, 2002, to mid-December 2013—shows that when TCI dips into the range between -23% and -27%, it typically precedes strong short-term uptrends. Even at the current level of around -10%, TCI has historically been associated with notable corrective uptrends in gold prices.

This suggests that a short-term bullish correction in gold is likely underway.

Chart: TCI Chart on Gold (2002-2013)

TCI Analysis Summary:

1. TCI forecasts a correctional uptrend starting after December 19th, 2013.

2. A TCI value around -10% has historically signaled short-term uptrends.

Conclusion:

According to TCI, gold is likely to experience a short-term bullish correction before resuming its dominant bearish trend. Traders should exercise caution and consider placing a stop-loss order around $1,175 per ounce. A drop below this level could lead gold prices to fall further, potentially reaching the $1,087 target or even the $1,040–$1,050 range.

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📊 The TCI Gold Forecast Table

Here is the TCI indication and forecast for the future course of the gold price.

Table: TCI Gold Forecast Table

Time	Close	High	Low	Volume	Change	Volatility	TCI
2013.12.19	1187.78	1226.26	1187.08	67,212	-2.53%	3.3%	-10.85%
2013.12.20	1202.73	1207.40	1188.73	51,841	1.26%	1.6%	-9.28%
Forecast: +1 Trading Day 22-12-2013							-9.32%
Forecast: +2 Trading Days 23-12-2013							-8.94%
Forecast: +3 Trading Days							-8.13%
Forecast: +4 Trading Days							-6.44%
Forecast: +5 Trading Days							-7.04%
Forecast: +6 Trading Days							-6.17%
Forecast: +7 Trading Days							-5.06%
Forecast: +8 Trading Days							-5.87%
Forecast: +9 Trading Days							-6.70%
Forecast: +10 Trading Days							-5.49%

 

■ Free Trading Signals: Gold Price Outlook as 2013 Ends

George Protonotarios, Financial Analyst

for Trading Center.org (21st, December 2013)