In my opinion the correction in Gold is far from complete as it seems that we are still tracing the first A-wave of the correction, which is a 5-wave formation which started at 1920. A correction can never be 5 waves, therefore we need at least another three and another five.
I assume we are tracing a zigzag and wave A is completing in which waves 1-4 are done and wave 5 is unfolding and is likely an ending diagonal. Wave 3 was extended and falling just short of 1.618 multiple of wave 1. Since wave 3 was extended we may assume equality of waves 1 and 5. This brings us to the final target of wave 5 to approx 1000. Intermediate targets being 1100, bounce back to 1200 and then down to 1000.
Once wave A is completed we need to see a sharp correction back to approx 1400 (terminus of wave 4). Another reason for that level is that ending diagonals are usually quickly retraced to at least the point of departure. So 1400 for gold in a few months seems realistic.
The retracement to 1400 would mark the completion of wave B, which will be followed by the descending wave C. If the whole correction is a zigzag and assuming equality between wave A and C we can well go down to 500, but I think the more appropriate targets for wave C would be either 1000 (strong psychological support, strong support of the top of wave 4 formed in 2008) or 700 (end of wave 4 of 2008).
I believe we still need at least a year or so to complete the whole correction. Since USD is going to strengthen for another year or even longer this might make sense that gold prices will hold low. Only once we start seeing increasing weakness in USD, then the focus will switch to Gold as a primary capital preservation vehicle. And we can get a dramatic rally therein.
Andy thanks a lot for the chart and explanation. We're in wave 5 of C wave now. Where do you expect this wave to complete as we may be getting close or maybe we may extend from here 1170. Any new thoughts on gold? Are you also doing any work on GDX?
JeffreyWoodiwiss
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I like your projections on spot, where do these levels for spot put the XAU index?
AndyM
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I don't track XAU index, so no idea, unfortunately
AndyM
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please note that this chart is pretty old, I updated the wave count recently, attached please find the link.
JeffreyWoodiwiss
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Thanks
sugardaddyFED
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Great EW analysis and I have similar view - current gold market is a sell the rally = bearish and I might just add that for the world economy to reduce debt, they need inflation = growth = fiat money losing its value again = higher gold :-)
AndyM
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Thanks! This is my first EW analysis that I actually like. Been practicing EW for 6 months and I'm totally in love with this theory!
sugardaddyFED
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i look forward to ur EW analysis as I am still learning too hahaha