Gold stays firm this week toward 1880 after breaching a major resistance zone. What next? The following 7 December Gold Elliott wave analysis shares some technical insights.
December 09, 2020 / AtoZ Markets – Demand for the precious metal increased in December so far, despite risk-on sentiments. Once again in the last quarter of the year, the yellow metal dropped its safe-haven nature and rallied with other riskier assets. As the dollar plummets, Gold recovers from the bearish phase that resumed in November after the US election results and vaccines news. Gold dropped to its lowest in four months as investors preferred riskier instruments.
In recent weeks, risk headlines have been filled with the news of the vaccine roll-out and stimulus package despite rising Covid cases especially in the US. All these point to higher investors’ risk appetite which should have pressured safe-havens like Gold. However, the yellow metal has followed the dip with over 4.5% resurgence in December. This suggests that we might have seen the end of the bearish phase. Meanwhile, as the technical analysis below shows, a dip below the 1850-1860 zone might happen before further rallies.
7 December Gold Elliott wave analysis – long-term forecast
The long-term view we have maintained is still intact. As the weekly chart below shows, Gold doubled its price between December 2015 and August 2020. It made a new all-time high at 2074. Meanwhile, the rally from 1040 to 2075 is clearly impulsive and shows a clear bullish trend. With the 7 December Gold Elliott wave analysis, we could track how much the bullish trend has gone and how much more it could go. Prior to 1040, the metal completed cycle wave IV (black). Cycle wave IV could then extend to 2500 or even higher.
From 1040, we can keep track of cycle wave V. Primary sub-wave of 1-3 (circled in red) of cycle wave V are already done. The dip to 1760 is the 4th primary sub-wave of V. The price was duly supported by the 1780-1790 critical zone – short of the 38.2% Fib retracement level. If this is the case, we should see further rallies in the coming weeks and months above the 2075 all-time high. The medium-term degree chart below shows the sub-wave of the primary wave 4.
Medium-term Gold forecast
As the hourly chart below shows, a double zigzag pattern has ended at 1760. A 5-wave rally should ideally follow to a fresh high if the 4th primary wave has ended. Otherwise, a 3-wave bullish leg should surface toward 1950 if the primary wave will get more complex. In the short-term, a bullish impulse wave of the minute degree is close to completion just below a resistance zone. A 3-wave decline should follow to at least 1820 before we see one more more leg at least toward 1950.