Chris Vermeulen: Gold Price at a Crossroads, Watch This Breakout Zone
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"The breakout zone for gold which will start to get really exciting for me is about the US$2,089 level," said Chris Vermeulen of TheTechnicalTraders.com.
Gold broke past US$2,000 per ounce for the third time ever in early April, and since then it's remained elevated.
But what's next for the yellow metal? Chris Vermeulen, chief market strategist at TheTechnicalTraders.com, told the Investing News Network that he sees two potential paths moving forward — one where gold takes off and one where it retreats.
"The breakout zone for gold which will start to get really exciting for me is about the US$2,089 level," he said during the interview. "So more or less if it can break or hold above US$2,090, especially on a monthly basis, that's the most significant price chart that I like to follow. Then we could be off to the races for US$2,600, US$2,700 gold as the next stop."
However, that type of big move isn't guaranteed. Vermeulen pointed out that gold's recent price action has been driven by news events, including the banking crisis and expectations that the US Federal Reserve may stop hiking interest rates. If the US goes into a recession and stocks collapse like they did during the tech bubble and 2008 financial crisis, gold is likely to take a hit.
"While I'm very bullish on gold and I own a lot of physical metal for the long-term picture, we could still see gold pull back and continue in this kind of sideways channel over the next year," he explained. In his view, it's possible the precious metal could sink all the way down to US$1,650, but US$1,800 is likely the lowest it will go.
Silver is far from its all-time high, but its volatile nature means it could quickly catch up if the first scenario plays out for gold.
"I do think silver will probably blow up and take off to the upside — it will rocket higher back up to that US$50 (per ounce) level, which is significantly more return than gold. But it's going to probably be a much more volatile ride," said Vermeulen
He emphasized that uncertainty continues to be a theme today, and said investors need to be nimble.
"The news and everything to me is super bearish. Everything's falling apart — we're not even in a recession and banks are blowing up. You'd better be prepared to stand aside or benefit from this potential collapse," he said. "And if it doesn't collapse, perfect. If it goes up we'll jump on board, we'll ride the trend higher. That's the nice thing about technicals."
Watch the interview above for more from Vermeulen on gold, silver and the overall market. You can also click here for his new book, which will be available on May 15.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
