The price of gold experienced a roller coaster in 2023. It fluctuated and declined in the first nine months of last year, then soared from a low in October last year to an all-time high. The rise since last fall came as a surprise to many investors, as they had previously feared that sticky inflation would strengthen the dollar and curb demand for gold, causing the trend of SPDR Gold ETF (GLD.US), the largest physical gold ETF, to fluctuate in a range.

But for TheStreet Pro analyst Bruce Kamich, this was all to be expected. On October 10 of last year, he told investors that “the 8-year cycle of gold prices is bottoming out.” After accurately predicting the latest round of gains, the analyst now continues to be bullish on the price of gold even though the price of gold has reached a new high.

Technical analysis shows that gold ETFs still have room to rise

Kamich, a veteran veteran with a history of more than 50 years using technical analysis methods to analyze commodities such as gold, is also bullish on gold prices. Notably, his experience in evaluating prices, volume, and technical analysis indicators (including momentum) enabled him to accurately predict that gold will bottom out in October.

Kamich recently re-evaluated the SPDR gold ETF chart as the price of gold has risen sharply to an all-time high. He remains optimistic. Kamich wrote in March that the daily trading volume histogram showed an increase in trading volume in recent days. The daily balance of volume (OBV) trend line shows strong momentum since mid-February and is expected to reach new highs during the upward process. The trend following the Similarity and Similarity Moving Average (MACD) oscillator is in a bullish trend above the zero line. Balanced trading volume is essentially an increase minus a decline in trading volume. MACD is a momentum indicator.

The SPDR gold ETF closed at $203 on March 27. Using the weekly dot line chart, Kamich calculated that the ETF's target price was $271. Also, it could have more room to rise. Kamich said, “I used weekly price data and indicators such as percentage changes, which showed that the target price was in the $299 region.”

Interest rate cuts and safe-haven demand are expected to boost gold prices

The Federal Reserve's monetary policy goal is to keep inflation and unemployment low at the same time. Inflation soared in 2022 due to loose monetary policies to reduce unemployment during the pandemic lockdown. After the ship ran aground in the Suez Canal, global supply chains were disrupted, causing prices to soar. In response, central banks around the world developed the toughest policies since Volcker declared war on inflation in the 80s of the last century. The US federal funds rate was also raised from basically zero to 5.25%, putting huge resistance on gold denominated in US dollars.

Interest rate hikes successfully curbed inflation and drove the annual rate of the US Consumer Price Index (CPI) down from a peak of more than 9% in June 2022 to around 3.2% in February 2024. As a result, the Federal Reserve is no longer under pressure to raise interest rates, causing the dollar to weaken and the price of gold to rise.

It's unclear if or when the inflation rate will reach the Federal Reserve's 2% inflation target. However, the progress made so far has pushed the Federal Reserve to wait and see, and importantly, the “Economic Forecast Summary” (SEP) released by the Federal Reserve in December last year shows that interest rates may be lowered three times by the end of 2024.

Kamich also pointed out that the US economy may support gold stocks in 2024. The Federal Reserve expects the US gross domestic product (GDP) to grow by 2.1% in 2024, down from 2.5% in 2023. Furthermore, the unemployment rate is expected to rise to 4% from 3.6% in 2023, albeit still at a low level. The economic slowdown and rising unemployment are likely to make this year challenging, especially given the uncertainty of the US presidential election year.

If so, gold could benefit from the depreciation of the dollar and safe haven funds. Seen from this perspective, SPDR gold ETFs more than doubled between 2008 and 2011, when the global economy had taken a firm foothold and was recovering from the Great Recession. Gold prices also performed well when the Federal Reserve began cutting interest rates in 2019 and when the global economy was disrupted by COVID-19 in 2020.

If the price of gold falls to an “8-year” low, as Kamich assumed in October last year, then interest rate cuts and investor uncertainty may help gold stocks rise. Kamich listed gold mining stocks as the top choice for 2024. According to the data, he believes Harmony Gold (HMY.US) may rebound to $10. He also set a goal of $12 for Osisko Gold royalty (OR.US).