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Metals , Investing

Why Gold May Be Approaching a Critical Juncture

This classic Elliott wave pattern often ends with a burst

by Bob Stokes
Updated: January 05, 2023

Elliott Wave International's analysts study Elliott wave price patterns to help ascertain what is likely next for major financial markets.

Part of that Elliott wave analysis involves setting price targets which align with Elliott's rules and guidelines.

So, let's briefly touch on a classic Elliott wave price pattern and reference a price target regarding gold.

First, realize that there are quite a few gold bulls out there right now. Here are a couple of headlines:

  • 3 Charts That Show It's Time to Buy Gold (Barron's, Dec. 8)
  • 'Attractive risk-reward': Gold to rally by a double-digit percentage in 2023, UBS says (CNBC, Nov. 7)

Yes, gold has been in an uptrend since its early November low of $1616.47; however, our analysis suggests that the precious metal may be approaching a critical juncture.

You see, a classic Elliott wave formation known as an ending diagonal may be taking shape in gold's chart pattern.

As our Dec. 30 U.S. Short Term Update reminded subscribers:

Ending diagonals terminate the pattern at larger degrees, forming as fifth waves when the prior trend has come "too far, too fast..." The fifth wave often ends with a burst above the top boundary line of the diagonal, which is swiftly reversed. (emphasis added]

I'd love to show you the exact developmental stage of this ending diagonal but that's reserved for subscribers. But, if indeed an ending diagonal is playing out, when it concludes, what follows will likely take many precious metals' observers by surprise.

Do know that our U.S. Short Term Update mentions a price target that -- if reached -- will satisfy the minimum expectations for the ending diagonal to be complete. As mentioned, the price action may go beyond that in a burst before reversing.

Keep in mind that Elliott wave analysis offers no guarantees, but at the same time, also know that just two trading days after gold hit that Nov. 3 low of $1616.47, our Nov. 7 U.S. Short Term Update said:

[Gold]'s strong rise from $1616.47, the "test" of the lows of September 28 and October 21, appears to be an [Elliott wave] impulse, which may portend still-higher prices. [emphasis added]

As you probably know, gold has indeed rallied since then. You can get the important details of our current near-term forecast for gold -- as well as silver -- by following the link below.

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