Gold Prices Dip, But Pattern Incomplete to Upside
Gold prices continue to consolidate inside a range. The Elliott Wave model we are following hints that we could see an eventual breakout above $1295, though it does call for some shorter term weakness.
According to the model, gold prices are grinding sideways in a ‘B’ wave. This wave could continue to drop towards $1228 and possibly dive towards the March low of $1194.
If gold prices do approach $1194, we think it may find support in the $1180 - $1194 zone. The model we are following does suggest a lower probability outcome for gold prices to break below $1122 and that prices are likely to hold above $1122.
The IG Client sentiment reading for gold is at +3.75. Traders have remained near current positioning levels for the past several weeks. In a way, this makes sense because gold prices have been trading sideways with no real breakout taking place. However, we can use sentiment as a contrarian indicator that suggests there may be weakness in the yellow metal in the shorter term. Follow this live reading and learn how to trade with sentiment at this link.
Bottom line, we are anticipating some losses in gold price and for support to form above $1122. Once support is formed, we anticipate new highs above $1295.
This is a shorter term outlook for gold. Read our quarterly gold price forecast to see what may be influencing the longer term cycles.
---Written by Jeremy Wagner, CEWA-M
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