The price of gold went close to $1240 in the middle of December, but the bulls have not been that strong ever since. On Friday the precious metal fell to $1167 but bounced up sharply to close the day at $1188. In order to find out where gold is likely to be heading next, we will examine its 1-hour price chart through the perspective of the Elliott Wave Principle.
The chart shows the whole decline from the top of $1239. It is a real mess actually. The easiest way to form an opinion, based on the Wave Principle, is to spot a clear 5-3 cycle. Unfortunately, the market is not always that benevolent. In this case, gold seems to be developing a double zig-zag correction labeled (W)-(X)-(Y). As visible, wave (Y) is not finished yet. Just like the rest of the waves in a double zig-zag, wave (Y) should also consist of three waves. We believe the five-wave impulsive decline from $1211 to $1167 is wave A of (Y). The sharp leap that followed is supposed to be a part of the corrective wave B. Even though wave B may not be over yet, if this is the correct count, we should expect another move to the downside in the face of wave C of (Y). If we take the guideline of equality between waves A and C into account, we can assume an approximate target of 1160$ for gold.
