The yellow metal is up about 20% in the last year, but at least one analyst says that it will soon go much higher. Here’s why he thinks it may set a new record.
In a recent interview with Kitco, Peter Reznicek, head trader at ShadowTrader, spoke about the extremely bullish signals that gold has been sending over the past six months. The metal is currently riding on six-year highs, oscillating in a narrow trading range above last year’s high of $1,553.
While the jump of roughly 20% in gold prices over the past year has enticed many investors, Reznicek says that the price spike is merely the beginning of something very exciting in the market. The veteran trader explained that he favors long-term charts and, when assessing gold, looks as far back as two decades ago to get a better idea of where the metal is headed.
Observing the market from this perspective, Reznicek found it clear that last summer marked a breakout from a prolonged range bound pattern. While some view gold’s retracement from the $1,600 level as a sign that the metal might be moving too fast, Reznicek isn’t the least bit concerned and assures investors that gold is on a clear upwards trajectory.
As Reznicek points out, gold prices soared around mid-2019 before moving sideways over the next couple of months, which is a bullish sign in and of itself. Gold’s strong positioning above last year’s highs suggests that the metal is enjoying excellent support around current levels and could be one or two drivers away from a major breakout.
Reznicek has little doubt that gold bottomed out ahead of the summer price jump and that, from a longer-term perspective, the metal is preparing to shoot far above current levels. Having been bullish on gold for some time, Reznicek unequivocally advised investors that long gold is the position they want to be in right now.
In terms of price levels, Reznicek pointed to $1,613 as the next key resistance level that gold shouldn’t have a hard time breaching. Over a slightly longer period, Reznicek said that gold investors should keep an eye out for the all-time high of $1,900 as a very reachable level, while leaving open the possibility that the metal could end up even higher in the near future. Reznicek’s prediction echoes that of several other guests on Kitco’s show, many of whom are predicting that gold will indeed recapture levels last seen in 2011 and possibly leapfrog them.
Speaking about short-term drivers, Reznicek singled out the coronavirus as a potentially important tailwind for gold. Although the trader feels that the outbreak hasn’t influenced the gold market to a significant degree thus far, he noted that any significant market disruption related to the virus would definitely play into gold’s favor.