“Gold’s mystery rally baffles analysts” was the headline in the Financial Times that caught Murray Gunn’s eye this week. In that article, one analyst was quoted as saying, “What took it from 2000 to above 2150 is the head-scratching part.”
Of course, there was the usual litany of rationalizations or guesses as to what may have been the reason for this latest spurt higher in the yellow metal. One suggestion was the prospect of U.S. interest rate cuts. Another was China being more hawkish over Taiwan. Yet another proposal was the nervousness over the health of banks.
It’s normal human behavior to seek reason, and almost all analysts in the financial markets will give you reasons why prices move, or what they think is the reason as to why prices are moving. We take a different tactic.
For us, prices move simply as a result of collective human herding behavior within which there are many factors that motivate decisions to buy, sell or do nothing. That’s why we study human behavior, which manifests in Elliott waves.
On December 1, 2023, Elliott Wave International’s Global Rates and Money Flows published a special section on gold featuring this chart. Noting the bullish Elliott wave structure, we stated, “Gold looks like it might be about to take off.”
The rally since then conforms with that forecast, but it might just be the start of a much bigger advance. The next few months are set to be very exciting indeed.
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