Bearish sentiment toward gold has reached historic lows, while its price has fallen only 45% since its all-time high, around 1,925, in 2011. The last time gold futures were this oversold on a monthly bar chart was back in the 1997-2001 period, when monthly stochastics tested the 10% extreme oversold threshold several times in a row, without ever bouncing to the 90% extreme overbought threshold. This has occurred again, since 2013, with stochastics making their third test of that oversold extreme now. The green ovals at the bottom of the monthly bar chart below warn that a major low is imminent!
At the same time, the green oval in the price chart highlights a cluster of indicators of a mature downtrend. This cluster implies at least a 50% rise in the price of gold futures in the coming 12 to 24 months. First, the lower two-standard-deviation band (golden/olive line) is being tested, which controls 95% of normality and hasn't let prices close below it in 30 months. Second, the lower channel line of the channel that has controlled prices since July 2013 is also being tested (successfully, so far). It has supported price in the past six tests since the channel began. Third, although price is making a lower low vs. the price low of late 2014, stochastics are making a higher low. This condition is called a bullish divergence buy signal and represents the drying up of bearish energy as the final wiggles of price pattern wind themselves into completion.