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.

Privacy policy
You may also like:

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 »

Famous Pattern Put Gold Traders Ahead of the Curve

Last week, gold finally broke out of the consolidation it has been locked in for almost a month. The price fell to $1400 before rising to $1453 on Friday, July 19th. But instead of maintaining the positive momentum, the bulls lost steam and allowed the bears to close the weekly session at $1425.66. Fortunately, a…

Read More »

Silver Looking for Support near $15 Mark

A little over a month ago, the price of silver was hovering around $16 following a strong rally from as low as $13.90 in November 2018. Many traders saw this 15% surge as a sign of even better things to come. Unfortunately for them, yesterday an ounce of silver was switching hands for about $15.…

Read More »

In Gold ‘s Elliott Wave Footsteps from 1200 to 1350

Gold bulls can be very pleased with their progress in 2019 so far. Three days ago, the precious metal climbed past $1346, bringing its total year-to-date return to 5.2%. Furthermore, gold is up 12.6% from its mid-November low at $1196. “Uncertainty” is once again the usual reason people use to explain gold’s surge. Trade war…

Read More »

More analyses