Gold ended the week at $1,331 per ounce, as prices consolidated below the $1,340–$1,350 resistance level (see the following chart).
Gold has climbed 12% since August 2018, and many see the trend continuing. MarketWatch reports, “Gold analysts at Goldman Sachs think the metal will rally 4% to $1,375 an ounce by this summer, and around 8% to hit $1,425 an ounce a year from now.”
MarketWatch lists eight reasons to be bullish on gold:
- Declining bond yields.
- A weakening dollar.
- Central banks sucking up supply.
- Fear factor (protection against troubled times).
- A deal on trade (with China).
- “All you need is love” (gold jewelry sales).
- Supply shortages.
- Technical factors. Says MarketWatch, “Since gold fell in 2012–13, it has repeatedly bumped into resistance at $1,340-$1,350 an ounce. If it breaks through this level, it will be a bullish technical signal that could suggest it keeps going higher, says James Paulsen, chief investment strategist at The Leuthold Group.”
If gold does break through the resistance level at $1,350, then that resistance level will become the new support level, and Goldman Sachs’ projection would have a technical foundation.
Rick Andrews is president of Avant Capital Management.