Gold – Weekly Analysis
Gold stands at a very critical point. The tone is grave, the risk is elevated, and the outcome could be decisive. In this update, we will explore the concerning signals.
CANDLES
Gold closed the week with bullish candles, yet they signal a higher probability of a continued move lower. The metal remains bullish until reversed.
In the August monthly, we flagged several major red signals on the larger frames, including a four-month Bollinger Band event not seen since 1980. The monthly RSI continues higher in overbought territory—the second-highest since 1980. Gold remains extremely stretched technically across multiple significant frames, which I read as proximity to a very significant top.
As outlined in the August 21 Long-Term Outlook, gold is likely building a significant top—one that could take months to complete. That hypothesis stands.
Gold – Long Term Outlook – August 21
As discussed previously, “a particular concern is the continued no-break advance in the monthly RSI, which has not been this elevated since 1980—45 years ago. Apparently, this implies a new reality in which gold is never corrected again. However, statistical analysis suggests a potential loss of about 35% if gold follows the average historical path after such an RSI stretch. In May, gold formed a bearish candle—June will show whether that signal is confirmed. Gold is now in a zugzwang position: any move on the monthly frame will only worsen either the technical conditions or the candle structure.”
ELLIOTT WAVES
Short Term
I continue to view the current leg as an after-triangle thrust.
Ending Diagonal
Perhaps I should have led with this, but consider it dessert. I believe gold made a serious mistake on September 17. The drop was deep enough to overlap a potential wave 1, invalidating an impulse off the September 11 lows. I should have flagged it midweek, though it only shows clearly on the 15-minute (or smaller) frames—it’s far less obvious on hourly and above. Gold doubled down on Thursday, failing again to form an impulsive advance. These failures are circled on the chart below.
My read: gold has likely begun forming a significant ending diagonal to complete the thrust. Some technicals are starting to align in support, but we need a bit more time. This could be the final week of the “gold rush” rally. Everything is lining up, and it may not even need a trigger—the move can falter under its own weight and overstretched technical conditions.
Summary:
Gold remains short- to mid-term bullish on candles, but the technical setup is extremely overstretched—a reversal could arrive at any moment. Stay alert to signals, especially the candle-led ones.
Elliott Waves and supporting technicals point to a developing Ending Diagonal—likely the final wave of the after-triangle thrust. The pieces are aligning; now we need a little patience.
Short/mid-term: bullish, high risk or reversal.
Long term: deteriorating, with an elevated risk of a developing top.
Happy Trading!
