close icon

Elliott Wave Ahead of Gold in Both Directions

Last week was hardly the best one gold bugs ever had. The yellow metal declined from $1319 to a low of $1288, before settling at $1297 for the weekend. So it made sense to expect more weakness after the open on Monday. Instead, the bulls returned to lift the price to $1313.57 by Tuesday, which the mainstream media explained with North Korea’s claims that the country considers U.S. President Trump’s tweets over the weekend to be a “declaration of war“.

If that was the case, the market must have gotten used to the exchange of threats between Trump and North Korea, because just two days later the price of gold fell to $1277.70. Gold is considered to be a safe-haven asset investors run to in times of political and economic uncertainty, so it is not at all surprising that its price initially rose. However, according to common sense, one could expect gold prices to continue to the north, because nothing is solved and tensions are still rising. Yet, two days later, gold is plunging.

Obviously, following the news and doing what everyone else thinks reasonable is not a very profitable trading strategy. Instead, we rely on the Elliott Wave Principle, which we applied to the chart below, sent to clients before the open on Monday, September 25th.(some marks have been removed for this article)

gold elliott wave analysis sep 25

This week’s issue of our premium analysis of gold included the above-shown hourly chart. It revealed that the structure of gold’s decline from $1357 to $1288 formed a five-wave impulse. To Elliott Wave analysts, this meant two things. First, gold’s trend has reversed and was pointing south now. And second, since the theory states that every impulse is followed by a three-wave correction in the other direction, this chart suggested “we could expect a short-term rally in wave (2/B) to lift the price up to the resistance of wave 4 before the downtrend resumes in wave (3/C).” That is how the Wave principle prevented us from joining the bears prematurely. The week is not even over yet, but let’s see how the situation has been developing so far on the updated chart below.

gold elliott wave analysis sep 28

Gold’s initial rally to $1314 fits perfectly into the position of the wave (2/B) we were anticipating. Then, right on schedule, the bears returned in wave (3/C). Navigating through the markets has never been easy, but it gets even more difficult when adding Kim Jong-un and Donald Trump’s unpredictable behavior to the equation. Fortunately, we have a powerful ally in the Elliott Wave principle, which focuses not on what somebody says or does or says will do, but on what message the market is sending through the charts, allowing for a much more objective trading decisions.



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Silver Price Going for $19 Before Retracing to $16

The price of silver, otherwise known as a safe-haven asset along with gold, crashed sharply as the coronavirus panic swept equity markets. XAGUSD fell to $11.64 on March 18th just as investors needed a refuge the most. But the precious metal has appreciated significantly since the depths of the selloff. As of this writing, silver…

Read More »

Gold is Crashing. Elliott Wave Somehow Predicted It

Common sense dictates that in a time of crisis demand for safe-haven assets jumps. The price of gold, for instance, the most sought-after asset in difficult periods, climbed to an all-time high of $1921 shortly after the 2008-9 market crash. This time though, as the world economy is on the verge of grinding to a…

Read More »

Gold Fails as a Safe Haven Amid Coronavirus Panic

The S&P 500 was down 14.4% for the week at one point Friday on fears the coronavirus outbreak is going to become a worldwide pandemic. It is common knowledge that investors turn to gold when stocks and other risky assets decline. Last week, however, that wasn’t the case. While stock markets around the globe were…

Read More »

Silver Bears Discouraged by Fibonacci Encounter

We last wrote about silver in March 2019, when the precious metal was hovering slightly above $15. Our analysis of its 4-hour chart gave us plenty of reasons for optimism. And indeed, six months later in September the price reached $19.65. Currently, silver is trading near $17.75, up from $16.53, but still down from that…

Read More »

Gold ‘s Surge and US-Iran Have Little In Common

Gold climbed to a six-year high on rising tensions between the US and Iran following the assassination of Iranian General Qasem Soleimani. The safe-haven asset reached $1590 earlier today as #WorldWarThree started to emerge on Twitter. We hope WWIII remains just a hashtag. In the meantime, we are once again baffled by how the media…

Read More »

Gold Traders Better Off Ignoring the News

In our previous article about the precious metal readers saw how the Elliott Wave principle put us ahead of gold ‘s $72-decline from $1531 to $1459. In short, the hourly chart made us think a three-wave decline from $1555 was still in progress. Hence, the bears remained in charge and more weakness could be expected.…

Read More »

Explaining Gold ‘s Weakness With Elliott Wave Logic

Gold bulls suffered in four of the last five daily trading sessions. A week ago, on September 24th, the price of gold briefly exceeded $1535. Earlier today, it touched $1459 before recovering to $1466 as of this writing. In the meantime, global economic growth is slowing and several recession indicators are flashing red; In what…

Read More »

More analyses