The last week or so has been tough for gold. Chris Vermeulen of TheTechnicalTraders.com outlines what could be next for the yellow metal.
August has been a challenging month for the gold price. Although it started the period above the US$1,800 per ounce mark, it has since declined, at times trading around the US$1,700 level.
Speaking to the Investing News Network, Chris Vermeulen of TheTechnicalTraders.com, explained what he thinks could be next for the yellow metal, looking at both higher and lower scenarios.
“We’ve had this big washout low … where we saw gold go all the way down to roughly US$1,680 a share in pre-market, and that to me I think is a pretty big washout move,” he said.
This week’s selloff brought gold down to what he called “a very strong support zone,” and he noted that it may have hit a strong bottom. In his opinion, if the yellow metal can hold at the US$1,680 to US$1,700 level, now is a good opportunity for long-term investors to buy.
Of course, it’s also possible that gold could go lower in the near term. Vermeulen, who is chief market strategist at TheTechnicalTraders.com, said that investors tend to buy and sell at whole numbers, meaning that US$1,600 could be the next level down if gold ends up dropping further.
Looking at gold’s upside potential further out in 2021, he said he thinks it may hit US$1,900 or even US$2,000 — but he emphasized that those levels aren’t easily in reach.
“I think we (could) get back up to US$1,900. Potentially we (could) get back and flirt with US$2,000. (But) there’s a lot of work that needs to be done with gold,” Vermeulen explained. In his opinion, US$1,840 will be an area of significant resistance, and US$1,900 will also be “a pretty big line in the sand.”
He added, “I think it’s going to be a stretch to see gold back up at US$2,000 by the end of the year. I think it might be flirting with the US$1,900 to US$2,000 range, but it’s going to probably take the rest of the year for gold to find support, start to find a little staircase of price action.”
Watch the interview above for more from Vermeulen on gold and the overall market.
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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.