Gold's Breakout Across Major Currencies Paves the Way for a Surge to $3,000

Since April, gold has experienced a choppy rise, hindered by the lack of a breakout across all major currencies—until now. Here's what to expect next.

Throughout much of the summer, the precious metals community expressed frustration over gold’s sluggish uptrend, characterized by a 'two steps forward, one step back' pattern. In a recent Substack piece, I discussed the reasons behind gold's tepid uptrend and urged the community to keep the faith, as I believed a stronger rally was imminent. In that piece, I explained that gold's uptrend since April was driven more by weakness in the U.S. dollar than by gold's own strength.

When priced in other major currencies, gold had made little to no progress since April. The silver lining, however, was that gold was poised to enter a much stronger bull market once it achieved a breakout across all major currencies. Sure enough, late last week, gold finally broke out across all major currencies, signaling that the next leg of the bull market has officially begun. I'll now share those charts and explain what I anticipate for gold's next move.

Spot gold priced in U.S. dollars had a succession of breakouts over the past few months including breaks above the $2,475 and $2,525 levels, which are now supports. Gold’s breakout will remain valid and in-play as long as it remains above those key support levels.

Gold priced in euros had been trading in a narrowing range for the past five months. This trading range is a bullish technical pattern known as an ‘ascending triangle.’ Late last week, gold priced in euros closed above the 2,280 level in a decisive manner, which is a bullish technical signal. I find it valuable to monitor gold priced in euros because it removes the influence of U.S. dollar weakness or strength and shows whether gold is actually strong in its own right.

Gold priced in British pounds also formed an ascending triangle with a key resistance at 1,940, which it broke above late last week:

Gold priced in Swiss franc is forming a clear trading range with a key resistance at 2,225. Unlike most other major currencies, gold hasn’t broken out in Swiss franc just yet. This chart is worth paying close attention to because Switzerland is a very important center for the international gold industry with its numerous mints, refiners, and an extensive gold trading and banking sector. A close above the 2,225 resistance should have a significant psychological impact on the Swiss gold industry.

The chart below shows gold priced in euros, British pounds, and Swiss francs. I find that this particular mix shows gold's movements very clearly. Notice how gold traded in a well-defined 400-point range over the summer and broke out of this range late last week, which is a very bullish sign.

Gold priced in Chinese yuan cleared its key 18,000 level:

The chart below displays Shanghai Futures Exchange gold futures, which were the primary vehicle behind the China-centric gold frenzy in March and April. Notice how prices have been oscillating within a well-defined trading range. As I explained in another piece, my theory is that a convincing break above the 585 resistance level will kick off another surge of Chinese gold buying as trend-following buy programs kick in, human traders get FOMO, and the rest of the world piles on as well. This chart hasn’t broken out yet because China has been celebrating the Mid-Autumn Festival, which ends on September 17th. Once China’s traders get back to their desks and see how gold has broken out, that’s when the fireworks are likely to start. Watch this chart very closely.

Gold priced in Japanese yen has been trading in a wide range, mostly due to wild swings in the yen:

Gold priced in Hong Kong dollars broke out late last week:

Gold priced in Singapore dollars formed an ascending triangle with a key resistance at 3,320 and broke above that level late last week. This is an important development because Singapore is a regional gold trading hub and is expected to become even more influential in the gold arena in the years ahead. Similar to Switzerland, so the close above the 3,320 resistance should have a significant psychological impact on Singapore’s gold industry.

Gold priced in rupees broke out late last week, which is significant because India is a major gold-consuming country with a deep-rooted cultural affinity for the yellow metal:

Gold has clearly achieved a decisive breakout across all major currencies, and I believe this is just the beginning of a much larger bull market. To gain insight into my long-term, fundamental outlook on gold, I encourage you to read my ZeroHedge piece from earlier this year. Ultimately, I foresee gold reaching $5,000, $10,000, $15,000, and even higher when the massive global debt and asset bubble eventually bursts. In the nearer term, following this recent breakout, I expect $3,000 to be the next key target. I arrived at my $3,000 gold price target through multiple methods, which increases the likelihood that this projection will come to fruition.

First off, I analyzed the chart of gold priced in a combination euros, British pounds, and Swiss francs and determined that the next move is likely to be what technical analysts call a ‘measured move,’ which is when a rally after a consolidation pattern is projected to rise the same number of points as the rally that preceded the consolidation pattern. According to that principle, gold is likely to reach approximately $3,000 in just a couple months after breaking out! In case that sounds preposterous, that is only a 20% move from here—something that has already occurred this year.

Additionally, the chart of China’s SHFE gold futures suggests a measured move is likely, projecting a surge to $3,000:

In conclusion, gold has finally broken out across most major currencies, signaling the start of a much larger bull market (provided that the breakouts hold above their key support levels). This breakout, after months of choppy movement and frustration within the precious metals community, is a powerful indicator of the next phase in gold's rise. Technical analysis across multiple currencies, including the euro, British pound, and Swiss franc, suggests that gold is now set to move toward the key psychological and technical level of $3,000. With this breakout, silver is also expected to follow suit, potentially reaching $50, the peak it hit in 2011. Long-term, gold should rise much further, reaching $5,000, $10,000, and even higher, especially when the global debt and asset bubble bursts. For now, all signs point to a bullish future for gold in the months ahead.