Where does gold go now?

William says prior patterns suggest we are at or near the peak, with a re-grouping, before another rise to yet another record high. What will drive it?

Several potential factors could drive the dollar price up, but Goldman Sachs suggests that geopolitics may be the driver with several flashpoints around the world. We look at the price of gold in the context of recent records on several indices and also the new highs seen on Bitcoin.

(AI Video Summary)

Gold on a wild ride at the moment

The markets are on fire right now, with various sectors like the S&P 500 and European markets hitting all-time highs. Even gold and Bitcoin are soaring to new heights. However, we should tread carefully and pay close attention to what's going on.

Let's start with gold. It's been on a wild ride and is currently overbought. This means it might go through a short-term correction, possibly dropping to around $2,080 or even $2,000. But there's still potential for gold to rise in the long term, with some even predicting it could reach $2,400 or even $2,700.

The Bitcoin rollercoaster and risk factors

Now, let's talk about Bitcoin. It's a bit of a rollercoaster, driven by both risky and less risky sentiments. Recently, the launch of a new ETF and an upcoming halving cycle have been boosting Bitcoin.

But we need to be aware of the risks lurking around the corner. One major risk is inflation, which could surge in the latter half of the year. The numbers show higher-than-expected and sticky inflation, which is not a good sign. And don't forget those black swan events, like geopolitical uncertainties, that worry many investors. Imagine something unexpected happening and causing chaos in the market.

Factors to watch out for

There are a couple of signals that things might change, too. When a topic appears in mainstream press, it often means the trend is about to end. Both The Economist and Barron's have featured covers with bullish market predictions, which could actually be a contrarian signal. And those momentum indicators everyone's raving about might be strong now, but they can't last forever. At some point, there might be a big momentum crash.

So, what do we do about it? We can try to predict market highs by looking at patterns like blow-off tops or exhaustion gaps. It's like trying to read a map to find where we're heading. To protect ourselves, we can sell some of our holdings, use protective stops, or try hedging strategies. It's all about being prepared for a potentially overbought market.

In conclusion, even though the markets are breaking records, it's crucial that we exercise caution. There are risks and signals telling us to be prepared for possible market reversals. Don't get too carried away with the excitement and always keep an eye out for potential downside risks.