While the coronavirus is the major headline for the shock and awe in gold , the chart has already presented a pattern that suggests a possible sell-off. And last week's decline could be the beginning of a massive sell-off according to Principle.
Elliot Wave Analysis
The decline from $1920.10/oz in September 2011 to as low as $1044.92/oz in November 2015 can be seen as a complete impulse pattern. The five waves are labeled 1-2-3-4-5, where wave 4 unfolded as a triangle and wave 5 in an .
The recovery from $1044/oz in 2015 to as high as $1688.72 an ounce in February 2020 looks like a simple A-B-C correction with a running flat wave B. According to the theory, impulses point in the direction of the larger trend. Once the corresponding three-wave retracement is over, the trend resumes.
In Gold's case, we have an impulse to the south followed by a correction. If this count is correct, there is a complete 5-3 wave cycle.
This means that instead of joining the bulls now, investors should remain cautious. The anticipated decline has the potential to drag Gold below wave (A) low around $1044 an ounce. With the yellow metal currently trading at $1585. 40 /oz, this translates into a 33% slump, maybe more.
This is a longterm view on Gold . It takes wave (A) around 5 years to complete the impulse, so we could anticipate this move to unfold in the next 3-5 years.
What's your thought on Gold? Can we see $1000 again?