close icon

Here is Why Gold Prices Turned Bearish From $1306

Gold’s last major bottom was formed at $1260.50 on October 6th, following a decline from as high as $1357. By October 16th, the price of the precious metal was up to $1306 for a recovery of over $45. But instead of continuing to the north, the bulls could not breach this barrier and fell pray to the bears, who dragged gold prices to as low as $1265 as of this writing. What happened at $1306 and why did the bulls abandon their ambitions so quickly?

Two trading weeks ago, before the market opened on Monday, October 16th, we sent 7 analyses to our premium subscribers, including one of gold. The following chart was included.(some marks have been removed for this article)

gold prices elliott wave analysis oct 16

As visible, the decline between $1357 and $1260 was a simple (a)-(b)-(c) zig-zag with a regular five-wave impulse in wave (a) and an expanding ending diagonal in wave (c). After we took a look at the bigger picture on the daily chart, we though the recovery from $1260 was also going to be limited to a three-wave sequence. Since three-wave patterns are counter-trend moves, it made sense to prepare for more weakness once the recovery was over. The 61.8% Fibonacci level looked like a reasonable area for the bearish reversal to take place, so we suspected gold should at least climb to $1310. The bears did not think so.
gold prices elliott wave analysis oct 27
$1306 was the best wave (c) was capable of. After that, it did not take long for gold prices to start plunging. Ten trading days and over $40 to the south later, gold trades in the mid-$1260s. Thanks to the Elliott Wave Principle, this is not such a big shock, despite Trump-North Korea, Catalonia and all the other political reasons suggesting gold should rise. Because quite often, the price patterns are much more important than the news.



Stay informed with our newsletter

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

You may also like:

Silver Prices on the Verge of a Breakout

Silver prices spent the last year and a half locked between $19 and $15.19, unable to choose a direction and leave this range. The precious metal is still in its boundaries, currently trading around $17.28, but from an Elliott Wave point of view it looks like we are finally going to see a breakout. Bullish…

Read More »

Ahead of Gold’s Trade War-Inspired Rally

United States President Donald Trump announced import tariffs on approximately $60 billion worth of Chinese goods. China responded modestly by imposing tariffs on just $3 billion worth of U.S. products, but that was more than enough to spark fears about a global trade war. Investors apparently did not like how the geopolitical landscape is shaping…

Read More »

Gold’s Message to Traders Ahead of Trump’s Tariffs

The price of gold bounced up last week after Donald Trump announced import tariffs on steel and aluminium brought uncertainty back to the landscape. The President went even further by saying that if Europe retaliates against the tariffs, the US will impose a tax on cars made by European manufacturers, such as Volkswagen, BMW and…

Read More »

Gold Looked Bullish Days Before Inflation Report

Gold bugs had another reason to celebrate Valentine’s Day after the price of the precious metal had its best daily trading session since the Brexit vote in June 2016. XAUUSD rose to $1355 on Wednesday after higher than expected inflation suggested the Federal Reserve may be forced to increase the interest rate at a more…

Read More »

Gold Tumbles Despite Clashes in Jerusalem

It has been a bad week for gold bulls. The yellow metal has been trading in a range between $1260 and $1306 for over two months and many thought it was trying to find a base to bounce up from. Unfortunately, the $1260 support everyone was heavily relying on suddenly gave up, opening the way…

Read More »

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…

Read More »

Gold, Trump, North Korea and the Moving Stop Order

You do not need to be Sherlock Holmes to find a good enough explanation for the recent surge in the price of gold. On one hand, there is North Korea, whose hostile behavior and multiple missile launches show just how fragile peace really is. On the other, there is Donald Trump, who has never been…

Read More »

More analyses