Gold – A Pause With A Critical Support at $2270/2280

4 months ago 326 views 3 min read

Grega Horvat

Analyst

Forex Analytix

Gold – A Pause With A Critical Support at $2270/2280

If you tuned into our FACE show yesterday, May 24th, you would have caught the discussion between Blake and me about gold’s trajectory (watch recording here). Reviewing the daily chart and the rise from October 2023 lows, it’s evident we’re in a robust uptrend. The powerful surge in the middle part of the rise is typical of a third wave extension in Elliott Wave terms. Following this, a fourth wave pullback is natural, and indeed, we are observing one after a failed attempt to breach the 2430 level, which resulted in only a temporary advance before metals paused.

This pullback isn’t surprising given last week’s surge in optimism as metals, particularly silver, moved higher. Keep in mind that the Elliott Wave principle, which gauges investor sentiment, suggests a reversal when sentiments reach extremes. The key level to watch is 2280, as discussed with Blake, who pointed out that breaking below this could signal a potential double top formation. So this level is crucial for a fourth wave retracement as well; its retracement which often finds support at the prior fourth wave’s low. Additionally, the retracement might reach 38.2%, and can travel the same distance of this fourth wave compared to the second wave of the same degree. These factors converge around the 2270 to 2280 zone, making it a significant area for potential resurgence, especially because the Elliott Wave pattern suggests the impulse from October 2023 is incomplete.

At the same time its important to note that latest strong US PMI figures can keep inflation at current or higher levels. So some may look for gold retracement as new opportunity to get in, to fight against the inflation

That said, I will be keep a close eye on the subs-structure in weeks ahead, and seen if we get a chance for trade idea. For more, and follow-up updates on this and more, make sure to tune into our show each day Monday to Friday. Thank you for reading!