Gold Futures are up $9.10 (0.5% gain) this morning trading at 1946.8. Yesterday $GOLD Continuous contract (EOD) gained $15.80—a gain of 0.82% registering a $1937.30 at the close. The intraday low 1851.50 was able to stay above the previous day’s low while the intraday high pushed passed the previous 3 day’s highs, but was unable to make it over the 1951 intraday high leaving the downtrend from the $2078.80 high alive.
There has been a lot of bullish talk about the metal due to rise in inflation and the hawkish stance central banks are taking. The US Fed raised rates last week by 25 basis points to 0.05%. It’s the first increase in over 3 years. Moreover, they forecasted a total of 7 quarter-point hikes this year putting its year end rate at 2.25%. It appears like this is going to be a full cycle of rates hikes. Remember, the last time the Fed increased rates this aggressively was back when they raised them from 2004 to 2006 pushing its rate from 1% to 5.25%. The Mortgage Bankers Association predicts the US mortgage rate will reach 4.0% by the end of 2022.
Inflation is running hot across the globe. UK inflation rate came in hot this week at 6.2% from February’s 5.5%. The increase was above the forecast of 5.9%. Global inflation is up a staggering 5% this year—up from 4.35% in 2021 and 3.47% in 2019.
Gold moved up above the 2000 level as inflation picked up after the Corvid panic. However, when the Fed raised its rate last week, the yellow metal tumbled off its near 2070 high, falling back down below the 2000 level where its trading now at $1928. Note that the near high 2070 failed to take out the 2075 July high. The only thing holding on to a possible re-test of the 2075 is that price is holding above the 1921 Sep 2011 high. If it drops below this, the chances favor a fall to at least the 1500 and possibly the 1000s.
The long term Elliott Wave Pattern warns of both these falls. If Cycle Degree II completed at the 1046 Dec 2015 low, it would mean that the rally to the Sep’ 20 high ended Primary 1 of an impulse to the upside. . Notice that the recent March high fell short of taking out the Aug’ 20 high leaving Primary wave 2 yet complete. It appears now that a wave c is needed to complete primary 2 down at the upper 1600s. From there, if this count is right, a move up in Primary 3 would be expected.
However, if Cycle Degree II did not complete at the Dec’ 15 low, then it should still be in progress. This would make the drop from the Sep’ 11 high to the Dec’ 15 low Primary wave A of a possible flat taking place. The run up to the Jul’ 20 high confirms this. Notice that the move made it above the Sep’ 11 high almost hitting the 114% BvsA retrace before dropping in what should be a 1-2 series to the downside. B’s of flats and triangle usually retrace better than 100% of their respective As but mostly not more than 138.2%. This one here failed at the 114%. The drop, if this count is correct, could reach the low 1000sThe deep drop since the March high confirms the downward drop.