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 hurried to explain gold’s jump with the rising US-Iran tensions. In fact, by the time Soleimani was killed, gold had been surging for an entire month.
Besides, unlike the assassination, this surge didn’t come out of the blue. The chart below, sent to subscribers on December 2nd 2019, depicts the Elliott Wave pattern that put gold on the path to $1590.
Over a month prior to the Soleimani killing, gold was hovering around $1464. Yet, the structure of the decline from $1557 suggested the bulls might still have a shot at $1600. It looked like a perfect (a)-(b)-(c) zigzag correction in wave 4, where wave (b) was a triangle.
Gold and the Difference Between a Cause and a Catalyst
In addition, the 38.2% Fibonacci level where fourth waves often terminate was providing a strong support here, too. Given that on the daily count, also included in our analysis, waves 1, 2, 3 and 4 were already in place, it made perfect sense to expected more strength in wave 5 to a new high. A month later, here is an updated chart of the price of gold.
The bulls got off to a slow start in wave 5, but eventually gained traction in the second half of December. By the beginning of January when Soleimani was killed, gold was already approaching new highs. Therefore, the real cause of the rally wasn’t the death of the Iranian General, but the Elliott Wave setup in place. Keep that in mind the next time you listen to CNBC’s explanations of market movements.
What will Gold bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!