close icon

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 for the bears to drag the price of gold to as low as $1244.

Fundamentally speaking, there was a pretty good reason for gold prices not to decline. Donald Trump declared Jerusalem the capital of Israel, causing outrage in the already destabilized Middle East. According to The Independent, Trump’s decisions risks uniting the Arab world against the United States, so one might think political and economic tensions are about to rise. Normally, gold is considered to be a safe haven in times of uncertainty, so it makes sense to expect its price to go up. Alas, common sense is not always a good ally in the markets.

Here is how the Elliott Wave Principle put traders ahead of the market once again. The chart below was sent to subscribers before the market opened on Monday, December 4th.(some marks have been removed for this article)

gold elliott wave analysis december 4

Instead of relying on external factors such as news and events, we pay more attention to price patterns. The one we recognized on the chart above is called a triangle. Triangles are continuation patterns. A triangle is nothing more than a correction, which temporary interrupts the larger trend. In XAUUSD’s case, the triangle in question was preceded by a three-wave (a)-(b)-(c) decline from $1357 to $1261. This led us to the conclusion, that once the triangle was over, the trend should resume to the downside. In addition, this pattern usually comes with a specific invalidation level. Wave (e) was not supposed to exceed the highest point of wave (c), so as long as gold was trading below $1299.50, lower levels were anticipated. The next chart shows how things went.

gold elliott wave analysis december 10

$1299.50 was never in danger. Gold prices headed south almost from the start and despite the fact that the tensions between Israelis and Palestinians in Jerusalem quickly escalated to armed clashes, the precious metal suffered its worst week since July. If it was not for the Elliott Wave principle, we too would be scratching our heads in bewilderment.

Stay informed with our newsletter

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

Privacy policy
You may also like:

Silver Entering Bearish Reversal Area

The price of silver fell to as low as $13.90 on November 14th. It has been recovering ever since and is trading above $15.90 as of this writing. This means silver has gained over 14% in just two and a half months, making it one of the best investments in 2019 so far. The bad…

Read More »

Gold Price Followed Its Elliott Wave Path to $1300

Gold’s third consecutive week of gains led the price of the yellow metal to the vicinity of the psychological $1300 mark earlier today. On December 14th, the price of gold fell below $1233, but according to experts, a combination of economic uncertainty, trade worries and rising interest rates sparked fear in investors, who hurried to…

Read More »

Gold Tests $1240 Resistance after Elliott Wave Setup

Gold is trading at levels last seen over a month ago, following mixed signals from U.S. and China on trade, Brexit worries and protests in France. The demand for safe haven assets is thought to be increasing at times of political and economic uncertainty, which helps explain the surge in the price of gold. On…

Read More »

Gold is a Bad Inflation Hedge. Still Watching CPI?

Similarly to crude oil, gold did not start November in the best possible way. The price of the yellow metal reached $1237.50 on the first day of the month, but was down to $1196 by November 13th. Unlike crude oil prices, however, bullion managed to reverse the negative trend and bounce up to $1230 yesterday.…

Read More »

Gold Prices Under Pressure Amid Easing Tensions

North Korea’s Kim Jong-un appears to have finally come to his senses. The isolated communist country announced it will discontinue its nuclear tests and close down its test site. The North Korean leader will meet with U.S. President Donald Trump in June to discuss the Asian country’s complete denuclearization. And while peace in Syria is…

Read More »

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 »

More analyses