Gold Update: Unstoppable?

Aibek Burabayev - Contributor - Metals

It's been awhile since I posted my last gold update in October. I haven't written about gold because everything was going by the plan: gold fell right after the post and even hit a new low making bears happy. I expected to wait for the week of the 29th of February as it was my time target in that update. But gold's price overshot the recent high which was the starting point for the last drop towards the new bottom invalidating the experiment.

Below is the chart from my earlier gold post to refresh your memory. I added blue call-outs with some new comments to show where it went wrong.

Chart 1: Updated Experimental Gold Chart

Updated Experimental Gold Chart
Chart courtesy of

I shadowed the part of the chart before the post date (October 22nd) to highlight the progress of the price. Gold quickly plunged down from the post date. It went all the way down with the largest drop in November and hit a new multi-year low at the $1046 level at the end.

The price then reversed up and it was by the plan that we should have zigzagged to the upside and then had another drop down (highlighted in red arrow). In the middle of January, gold charted a bearish red candle right below the red arrow pointing at the planned reversal to the downside, but the shadow beneath the candle showed that bulls repulsed the attack and the market closed higher. By the end of January, the price finally broke above the red arrow and rocketed both above the upper trend line and the previous high.

That move crashed the model and we should consider the experiment a failure ahead of the time target (February 29th) as the chart structure became invalid.

Further, I've prepared a new chart for you to read and take some clues from it.

Chart 2 Gold Monthly: Another Drop Is Ahead If February Fails

Monthly Gold Chart
Chart courtesy of

The trend is still down and we should wait and see if February can crack it to the upside. I've added 3 red arrows inside of the trend channel to show the main structure of the moves in the channel. Once the market breaks above the channel we should watch closely for further price development, but there is no alert for the bears unless the price closes above last January's high of $1308 (black dashed horizontal line). We will have enough time to get ready for a reversal.

But if gold fails to crash the downtrend, then we can see another good drop pointed by the third red arrow to the downside of the trend in the $900-1000 range.

The AB/CD concept shows that the CD segment advanced for more than 1.618 times of the AB segment (below the $1150 level, not shown). The next Fibonacci ratios are 2 and 2.272 located at the $998 and $890 levels accordingly. This coincides with the third red arrow target area. In the left part of the chart I've highlighted four rejected tops to show you the price guidance for the possible new bottom, will it be the last, God knows, let's live and see.

Gold is a top rival of the US dollar. The current chart structure shows that the chances of another dollar rally are high as it's in a large correction (more than 1 year already) inside of the 92-101 range (Dollar index chart). This tells me that another price drop of gold is ahead.

Intelligent trades!

Aibek Burabayev Contributor, Metals

Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from for their opinion.

4 thoughts on “Gold Update: Unstoppable?

  1. We can print Dollars, & you can have a building full of Dollars "Playing the Game", or you can have OIL, or GOLD, the 3 main sources of wealth. Let`s say one of these became almost useless....Which one of the 3 would be closest to what you could use in the bathroom ? Remember...Cash is paper with ink on it.

  2. I enjoy your analyses but I read them knowing that your past predictions have often been 'completely' wrong. I don't say that critically, because you always present a logical, well thought out theory, and you're charts also clearly show the points where it may not make the turn that you're predicting. It's rather ironic that the date of your post, Feb.11, is exactly the day that gold broke higher to the upside, crashing through your red, downtrend line.

    Please continue with your predictions in the future, but you may wish to place a little more emphasis on key points to watch for a sudden change where the plan may fail. 😉

  3. There was a trio of Gold, Crude oil and Dollar, which were deemed as an Financial weapons for U.S. however, they control or influence each other, but ultimately, being an option-less instruments, jointly, they were enough capable for Governing entire Financial Sectors world wide.

    Out of this trio, by turn, first Crude fall from its all time high of $ 150.12 on 11-07-2008 to $ 49.45 on 18-02-2009, afterwards, in triple top and triple bounce backs, around $ 115 between 2011 to 2013, finally we found a recent bottom around $ 25.

    Next turn was of Gold, in which, after forming All time High of $ 1920.84 on 06-09-2011 and then Gold has formed recent bottom of $ 1055.45 on 03-12-2015 so now if Gold too followed with Crude pattern, another collapse bellow $ 1055 will be quite natural and may go down up to $ 720 so current rise in a Gold may extend further but until and otherwise getting any long term trend turn around confirmation, it must be treated just as a major bounce back.

    Now, as a last remaining member of that Trio, We may assume same alike Fall in the exchange rate and absolute valuation of Dollar. I think, this will be a final fight to finish between Gold and Dollar, and whatever result thereof may be, but ultimately, even Winner of that battle too, will probably found in such a great hunted and damaged situation that it will not to be in a position to sustain either it's own value or it's status.

  4. Dear Aibek,

    Congratulations for your One more good study.

    As you well aware that since long long period, i am bear for Gold, and far ahead, had given lower targets of $ 1200 and $ 800. I am agreed with your predication of further or another fall, however, considering current movement and as for short term view, at present, my opinion is something different, and we may get some more upper levels, and accordingly, above and bellow range of $ 1265 to $ 1340 is quite important to watch.

    This is simply because, considering current world wide situation of all most financial sector, i think, we are sited on the verge of any sudden , sharp and bigger financial crisis, i just cant predict type, reason, or spot thereof, but Gold price is either indicating or reflecting some confirmation of any such probable event.

    And finally, It is difficult to decide that either Gold is rising actually, or that is due to dollar loosing it's intrinsic value, in a other way, whether Gold is dear or Dollar is cheaper?

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