How Low Can Gold Go?

By Ian Culley

May 30, 2023

From the Desk of Ian Culley @IanCulley

All-time highs remain out of reach for gold bugs.

But not all is lost. In fact, I still see constructive consolidations on longer time frames.

It’s messy. But I’m impressed with gold’s and silver’s resilience as they twist and bend beneath supply.

But how low can they go before they break…

For gold, I’m focusing on the prior commodity supercycle peak at roughly 1,924.

If it loses those former highs, the key retracement level at approximately 1,825 highlights the next potential support area:

I like this level for two reasons.

It marks a former polarity zone, coinciding with last summer’s pivot highs and the March pivot lows earlier this year. And it gives gold room to dance.

Gold futures are simply shimmying within a multi-year range as long as they hold above the March lows.

I imagine the gold bugs find the sideways action frustrating. Regardless, the bull case remains intact from an intermediate-term perspective.

On the other hand, the bullish argument becomes increasingly thin on a break below 1,825 as the lower bounds of the range come into focus.

Check out silver already sliding toward similar potential support:

I’ve said it before: Precious metals demand caution as long as silver holds below 21.40.

It’s not trading beneath that key level today – but it’s within reach.

A breakdown below the crucial shelf of former lows would signal further de-risking behavior among investors as other investments prove more rewarding.

That doesn’t sound like an uptrend to me.

To be clear, gold and silver appear limber as they go through the motions of absorbing supply. These are nothing more than healthy consolidations that often lead to rip-roaring rallies.

But none of this matters unless price confirms the bullish outlook.

Meanwhile, bulls must hold up their end of these ranges. The path for these shiny rocks leads lower if they don’t.

Stay tuned!

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