Analyst Sees Dollar Strength, Not Rate Pricing, Driving Gold and Forecasts $3,920

Analyst Przemyslaw Radomski of Golden Meadow noted that dollar strength, not the pricing of the US interest rate path, is the real driver of gold prices, in an analysis published on the Investing platform on October 1. He considered that the rise in the US dollar index explains the failure of the metal's recent rally.

The analyst divided the expected price trajectory into three stages: an initial verification rebound, then a move toward a primary target near $3,920 per ounce, followed by a larger decline at a later stage. This means he favors a net downward trend rather than a temporary correction followed by a rally.

In mining stocks, he pointed out that the GDXJ ETF is approaching a neckline at around $117, with a target based on the technical pattern slightly below the $100 level. He also viewed the largest expected move for silver as likely being to the downside rather than the upside.

This analysis falls under technical views that rely on indicators and price patterns rather than fundamental forecasts, making it different from investment bank estimates based on supply, demand, and policies. The decision remains with the investor to weigh this opinion against other contrasting perspectives on the metal's trajectory, as this forecast contrasts with other estimates predicting gold will hold above $4,000.

What do these terms mean?

Technical Analysis: A method for forecasting prices by reading charts and price patterns rather than economic factors. Dollar Index: A measure of the US currency's strength against a basket of currencies. Neckline: A price level separating a technical formation and the signal for subsequent price movement. Exchange-Traded Fund: A fund that tracks a basket of stocks and is traded on an exchange.