Gold

Gold’s Path to the Mid-2000s

Over the past few weeks, I have shared my views on GOLD’s potential path for attaining as high as $2100-2300. I showed the detailed daily charts in those articles, but today I would like to zoom out and assess the big picture Elliott Wave Principle (EWP) count using the monthly candlestick charts. See Figure 1 below.

GOLD topped in 2011 after an almost 700% (!) run since its early-2000s low. Thus, anybody who thinks GOLD is boring to trade and invest may wish to change that notion. These are cryptocurrency-like gains. After the 2011 top, the precious metal went into an almost five-year-long Bear market. It lost around 50% of its value when it finally bottomed in 2015.

Now GOLD is back at it and made a new all-time high summer of 2020, after which it went through an 8-months long correction. As I showed in my previous update, see here, GOLD should now be in a new Bull run targeting possibly as high as $2300+. Allow me to explain below.

Figure 1. GOLD monthly charts with detailed EWP count and technical indicators.

Dissecting a multi-month impulsive rally to ideally $2300.

Since its 2018 low, GOLD rallied in five larger waves (black major 1, 2, 3, 4, 5) to the 2020 ATH: blue primary III. It then declined in three waves (black major waves a, b, c) to complete blue Primary-IV. From the EWP, we know with certainty that in an impulse move, after the third wave comes a fourth and a fifth wave. So far, so good as wave-III and IV have most likely been completed. Now, wave-V should be underway (blue arrow) and subdivide into five smaller waves as shown in Figure 1; black dotted arrows.

Assuming standard Fibonacci-based wave-extensions and retraces, wave-1 should soon complete, wave-2 drop back to about $1800 before waves 3, 4, 5 take hold and bring the price to ideally ~$2300, $2100, and $2300+, respectively. Once Primary-V completes, another multi-year bear market should start (Red arrow). Given that there was no negative divergence on any of the technical indicators at the July 2020 ATH, strongly suggests GOLD needs to make new ATHs.

Bottom line. For as long as GOLD can stay above this year’s lows, it has outstanding potential to establish an impulsive wave higher to ideally $2300, possibly $2400+.

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