Gold has been in rally mode since its low in December 2016. But it has been a struggling rally with many overlapping waves. My preferred count has the Gold ETF (GLD) pushing higher over the next few months but the picture has become muddy of late.
The major indexes in the U.S. stock market peaked on January 26. Gold also peaked about that time and is actually down as of Friday’s close.
There has been much talk recently that inflation is on the rise. There has been and continues to be chaos in the geopolitical scene with possible trade wars brewing and real wars in the Middle East.
So is gold about to explode and rally to new highs above the August- September 2011 peak or is it about to turn down and plummet to new lows?
I mentioned above that I am short term bullish. But that scenario needs to see gold to rise soon and break out of the trading range it has been in since late January. But even then, I am not looking for new all-time highs.
The move down from the 2011 peak to the low in December 2015 occurred in 5 waves. So we are now in a countertrend. This countertrend is expected to be a zigzag but could morph into a couple of other patterns also.
If gold breaks down from here then the odds increase that the rally high in July 2016 is the top of the countertrend and gold will then be starting a new leg down that will take out the December 2015 lows.
Why would gold plummet to new multi-year lows? Maybe the deflationary crescendo hasn’t occurred yet. Maybe interest rates are going to rise dramatically. Maybe central banks will be liquidating some of their gold holdings.
I don’t know what could cause it to drop. All I know for sure is what I see in the charts. We monitor gold every day in the Insider membership.