Gold was hot in the first 6 months of this year. Hardly anyone predicted the monster rally we saw in 2016. And, as it always goes, right at a time that everyone got overly excited, gold prices stalled and did go nowhere since then.

The excitement around the summer of this year was striking, as suggested by the non-stop bullish media coverage. We highlight a couple of the articles that appeared right at a time when the price of gold was in the process of peaking:

• Credit Suisse Sees $1,500/Oz Gold By Early 2017 published by Kitco on June 30
• RBC Calling For $1,500 Gold For 2017, 2018 published by Kitco on July 15
• Is Gold Set To Hit $1,500 Per Ounce? published by Forbes on July 21
• Gold Bull McEwen Sees Prices as High as $1,900 by End of Year by Bloomberg on September 20

As always, we prefer to stick to the facts which we derive from chart developments as well as sentiment analysis and intermarket dynamics. We see a concerning trend developing on the gold chart. The green circles on below chart highlight the rare periods of price stabilization. Gold is a volatile asset, so it does not happen often that prices stabilize. In December of 2016, the price of gold stabilized which was an indicator that a reversal was brewing. Right now, we see the same happening. Both happened right a major support and resistance.

Price analysis suggest that the gold price forecast for 2017 is bearish.

Our expectation is much closer to what this article said in May I See Gold Correction In 2017, and, unfortunately, it is not as bullish as the articles highlighted above.

Where do we see the price of gold going in 2017? We start sensing that gold will continue to as a “fear asset” in 2017. Given that stock markets, which we consider an important risk indicator, are becoming very bullish, as suggested in S&P 500 Suggests Much Higher Prices Coming in 2016 and 2017, gold could take a hit as fear is moving away from markets. In the early days of 2016, markets were driven by fear, which is the reason gold rallied so strongly, but that has changed recently.

With that in mind, we see gold moving towards the lower area of its bearish trend channel. Right now, support comes in around 990 USD. By the second half of 2017, that will be around 890 USD, which is exactly the peak of 1980.

In other words, we do not exclude the scenario in which the gold price will hit 890 USD in 2017 after which it will turn around and evolve into a new and strong bull market.