The recent rise in the gold price, which occurred in the course of the past trading week, has largely confirmed our view of short-term advances. By crossing the small 0.62 retracement ($1,582), the precious metal was even able to provide a buy signal. However, only a very small one, as you can read in the following. Regardless of the positive introduction, gold is still in correction mode. Even “Elwave” does not rate the situation particularly well, as the upper chart shows.
Outlook for the gold price:
At the moment the small wave (B) of the ABC formation is forming. This wave can form as an overshooting wave and can therefore run up to the 1.38 line at $1,641. For the case at hand we already expect a further rise. However, we do not see the run up to the previously mentioned threshold. Some indications suggest that the trend will only run until the high of wave (1) at around $1,620. From this level, wave (C) will make its way and thus expose gold to renewed pressure. The correction potential remains within manageable limits, as the chart shows.
Supported by the lower light grey trend line, we expect a maximum sell-off at the gold price up to the 0.62 support at $1,515. Only a significant breaching of this very important area would create some danger. However, this does not yet mean the big trend reversal. After completion (C), the subsequent (3; not shown) will allow the trend to rise again. But even on this side, a cautious attitude is appropriate at first. More on this in a later analysis.
With breaching the small 0.62 retracement ($1,582) a buy-signal could be generated at the gold price with a range to $1,620. We still advise against longer-term commitments at this time. To hedge your positions, you should definitely rely on the 0.62 retracement at $1,515.