Gold Monthly Analysis

Candles

Annual

In the annual review in January, we highlighted the striking resemblance between the current technical landscape of gold and the setup seen in 1979–1980. That comparison is becoming increasingly uncomfortable. The 2025 annual candle closed above the Bollinger Bands, closely mirroring the 1979 structure, and 2026 has started in a similar fashion to 1980—continued upside that failed to establish new structural support.

This week, statistical extremes triggered a counter move that erased roughly 13% in just two days. Gold is now returning to the support levels I have recently outlined. Initial support could emerge near the upper Bollinger Band, which would imply a drawdown of roughly 30% from the peak. A more severe, yet still technically valid, scenario would be a retracement toward the 8-year EMA, translating into a decline of about 47%. The most extreme outcome—which has occurred in the past—would be a pullback to the 20-year EMA. A move of that magnitude, roughly –63%, would be catastrophic and would echo the experience of investors who bought near the 1979 peak and waited nearly 30 years to break even. For now, this scenario remains on the back burner.

Gold Annual Review – January 2026: https://investingangles.com/pd0u

Compared to gold, silver’s candlestick picture looks notably more bearish. Gold has so far managed to form strong bearish formations only on the daily and 2D frames. If downside momentum persists, the 3D frame is likely to join the bearish cohort as early as Monday.

The weekly closed with a possible Spinning Top, which still requires confirmation. On the monthly, gold may have formed a Hammer and now carries ten green candles without a meaningful pullback. This places it in a clear candle stretch, on top of being in the second-highest overbought technical condition. For now, this remains a hypothesis, as a strong bearish monthly signal has yet to appear.

Short term: bearish
Mid term: neutral, leaning bearish
Long term: bullish, with a high risk of reversal

ELLIOTT WAVES

Long Term

As gold has likely reached a significant top, I have updated the very long term chart with possible paths.

Blue: The recent top marked wave 3 of an impulse that began in 1999. Under this scenario, the pullback would likely carry gold toward support near the annual Bollinger Band, representing the most gentle outcome. A renewed rally would then be expected after a few months.

Green: The recent top was wave III of an all-time impulse. In this case, gold would be setting up for a more complex ABC correction for wave IV, a process that could take several years. This scenario would align with a return to the 8 EMA support on the annual chart.

Red: The recent top was wave V, assuming wave III ended in 2011. This would be the most severe outcome, implying a prolonged bear market lasting years, if not decades. Confirmation would come only if the current decline, labeled as wave (II), breaks below the 2011 high. This path would correspond to a retracement toward the 20-year EMA support.

That frames the strategy. Now let’s shift the focus to tactics.

Mid Term

On the mid-term chart, we can identify the last three major impulsive waves starting in 2024. These impulses were extended and likely part of the same larger wave, which makes precise wave labeling particularly challenging. At this stage, the most recent high can be treated as wave three of some degree. That interpretation would change, however, if gold crosses above the top of the previous major impulse. This key level is marked on the chart. A move beyond it would significantly increase the odds of a much larger corrective phase.

Short Term

The short-term wave structure is still developing, even though the decline has already exceeded 12%. The first move down unfolded as a corrective wave, labeled as either (a) or (w), followed by a corrective rebound, (b) or (x). The current move lower is also non-impulsive so far and fits best as wave (y).

The key takeaway is that the bounce off the recent low has been corrective. This strongly suggests that gold will need to make new lower lows, one way or another, to properly reset the wave counts. I have outlined the two most probable paths at this stage, but corrective structures are inherently flexible and can introduce a technically unlimited number of variations. The emergence of a clean, impulsive move in either direction would go a long way toward narrowing the current set of possibilities.

Summary:

Last week’s warnings played out quickly. After spending time in an extremely stretched technical zone, gold reversed sharply and lost more than 12% in just a few days. The speed of the move confirmed that the market had become fragile after pushing far beyond normal statistical limits and printing a long series of green candles. While the larger trend has not officially broken, the risk profile has clearly shifted, with downside now demanding much more respect.

From a structure point of view, the decline has been corrective rather than impulsive. Both the initial drop and the bounce that followed lacked strong momentum, suggesting the market is still working through a complex correction. The key point is that the rebound off the recent low was also corrective, which keeps the door open for further downside and new lower lows before the structure can properly reset.

On the bigger picture, gold still holds its long-term trend, but conditions remain tense. Some overbought pressure has been released, yet there is still no strong bearish confirmation on the weekly or monthly charts. For now, gold sits in a transition zone—no longer in a runaway rally, but not yet in a confirmed bear phase. The next moves will be critical in deciding whether this pullback stabilizes or deepens further.