Gold Update: That's It?

It’s really amazing to see how some people take a selfie every day from childhood and then compile a video from those photos to see the timeline of their life.

As gold reached all preset targets, hitting a new seven-year maximum of $1704, I think it’s an excellent time to contemplate the history of this large move up. I put the charts from the previous posts one by one to restore the timeline with my comments for you. Let’s start the time machine!

Chart 1. Global Monthly Chart Of 2016

Gold
Chart courtesy of tradingview.com

Four years ago, when the “Bulls Finally Took The Ball”, I posted a big map to share with you my view about a possible sizeable complex correction for gold to warn you of a time-consuming zigzag move. It was meant to become a real roller coaster with a big up and down move. It consists of two Fibonacci retracement areas. Green colored was set for the current move up. We almost reached 78.6% last week as price grew by $447 or 36% since that post in 2016.

I also applied trend angles (red) to build the trajectory for the move up and down. It’s 2020, and the new top was reached exactly according to that preset angle of 56° as it pointed in the area between 2019 and 2021. This instrument showed amazing accuracy.

The red Fibonacci area was set to measure how deep the global pullback would retrace in a red CD segment. We will discuss it in the last chart, so stay tuned.

Chart 2. Gold Weekly (November 2016) – Pullback

Gold
Chart courtesy of tradingview.com

After gold broke loose from the downtrend, it reached the top at $1375 in July 2016 and then started to reverse down. In my post “Gold Takes Bugs On A Roller Coaster Ride” I expected it to make a pullback into the 61.8-78.6% Fibonacci retracement area between $1116 and $1172 and then to bounce back up to one of the former tops at $1434.

The price, indeed, reached $1122 level and then reversed. Although it failed to hit that top as price stopped at $1366, it still moved as it was planned. In the next chart, you will see that the BC segment was yet to be done.

Chart 3. Gold Daily (February 2018) – Complex Junction

Gold
Chart courtesy of tradingview.com

When the “Gold Failed” to hit the target set in the previous chart, I shared with you a daily chart above to show the path of a possible extension in the BC segment (pink zigzag). It had implied the drop back from the $1300+ area in the former valley of $1122. The RSI was confirming that outlook.

That call was very close as the price sank to $1160, missing the target by only $38. And then the gold indeed reversed to the upside.

Chart 4. Gold Weekly (January 2019) – Three Options

Gold
Chart courtesy of tradingview.com

Last January, the “Move Was Too Big To Ignore” and I shared with you my view of possible three options for the gold.

The majority then chose the green option of an extended triangle. The structure with the shortest way up has played out (blue labels). Now it looks funny that the price target was so conservative, but this is how we should assess our chances not to underestimate the risk.

We are moving to the last chart from the past.

Chart 5. Gold Weekly (June 2019) – “Dreams Come True”

Gold
Chart courtesy of tradingview.com

In June 2019, after the market showed its serious intention to continue its robust growth, I was asking in my post: “Gold Bugs, How Deep Is Your Love?”. To answer that question, I applied Fibonacci ratios to set the D target from 1x to 1.618x of the AB segment with a price range between $1490 and $1691.

Call it a miracle, but all targets were hit. The name for the approach is the chart structure analysis as I try to identify passing moves and corrections in between.

This is the timeline of my major gold posts for the past 4 years. I hope you enjoyed the ride.

To carry on, now let’s again look into the future as we did in distant 2016.

Chart 6. Updated Global Monthly Chart – Is Another Drop Ahead?

Gold
Chart courtesy of tradingview.com

Last month the price couldn’t close above the orange trendline, although it hit beyond it. This month the price reached even higher, but the long shadow tells us that the metal couldn’t settle there as it dropped to update this year’s minimum. The RSI shows a Bearish Divergence as its lower peaks contradicting with higher tops on the price chart. The indicator is far above the crucial 50 level, but we got the first bearish alert on a senior time frame.

All preset targets were reached within the second large move up, the pullback retested the broken orange trendline, and the RSI rang the bell. Did we miss something? I guess it’s time to build the second large leg down with a red CD segment as C point could be in place already.

If the CD segment is the same size as the AB segment, then the target will be hit at $830, way below the psychological $1000 level. It is close to the 61.8% Fibonacci retracement level at $891. The price will then lose almost half of its current price. The second target is located at the 1.272 x distance of AB segment at $592, which matches with the 78.6% Fibonacci retracement level at $611. If that happens, gold will lose more than 60% from now. Of course, there will be a hard-to-crack barrier of recent low around $1000 on the way down.

The trend angles worked just fine in 2016, and I applied it again on the updated chart. It shows that the first target could be reached only by June of 2024.

Do you think gold will reverse down?

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If the price collapses, will it stop in June 2024?

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Intelligent trades!

Aibek Burabayev
INO.com 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 INO.com) for their opinion.

3 thoughts on “Gold Update: That's It?

  1. Your historical analysis has been amazingly accurate. So your future projections must be respected. With the clear policy path of accelerated debasement ("stimulus") it seems incredible that gold would collapse under $1000. What does that imply for other asset prices?

  2. As I said in previous comment the boat was heavily at the buy side, I expected the gold price to fall, especially when the platinum and silver were so pathetic, in there performance. Profits were sold to pay for margin calls from big instructions who had large positions. You may see a quick reversal only if a couple of country's by to sure up there currencies. Gold lost its leverage now that money instruments flow around the world with a flip of a switch. it takes to long to buy and sell and there's a ridiculous premium to buy or sell the gold bullion. The metal is for country's reserves and collectors,

  3. Dear Aibek,

    I think, For Gold Movement, you must remember all my earlier views, posted since 2011 on wards. In my last post of Dated November 9th, 2019, I had clearly stated that " Time frame up-to March 2020 indicates heavy volatility with an either side probabilities" and actually we found the same scenario.

    For Gold, Still I am bearish, and in my view, bottom formation yet pending and under process.However, to obtain specific lower targets, I would like to wait to get some confirm signals.

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