Gold Monthly Review
Gold has recovered roughly 70% of its sharp 21% decline, and the February close now demands a fresh evaluation. The pressing question remains: is the worst behind us, or is this rebound merely temporary?
To assess what comes next, we turn to our core analytical framework — candlestick structure, trend alignment, momentum dynamics, and Elliott Wave context — to determine whether the recent advance signals genuine stabilization or simply another phase within a broader corrective process.
Candles
Gold closed the short- and mid-term frames with bullish signals, and after the sharp reset in January, the smaller time frames look technically healthy. The concerns begin on the monthly and larger scales. The monthly printed an Inside candle, while the 2M remains extended well above the upper Bollinger Band. These higher frames continue to show strongly overbought conditions, with RSI approaching record levels.
I continue to caution that gold is likely to return back into the annual Bollinger Band range, as discussed in detail in the annual review. Achieving that would require roughly a 30% pullback from the top, as outlined on the chart below.
Overall, gold remains bullish in the short to mid term until technical signals suggest otherwise.
ELLIOTT WAVES
Long Term
This long term prospective remains unchanged, as written on January 31; just a refreshed chart.
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.
Short Term
Gold has reached the classical target zone for wave c of (B), with the structure potentially evolving into an ending diagonal. At the same time, because the upward legs have largely unfolded as impulsive moves, the possibility of a higher-degree impulse in purple cannot be fully dismissed — although I remain skeptical that the current advance represents wave 3 of any meaningful degree. So far, we have one significant overlap, as circled on the chart. A second major overlap would materially shift the interpretation.
If gold completes a blue abc structure for wave (B), with wave c forming a diagonal, the subsequent wave (C) could unfold very sharply. Such a move could drive price back toward at least the $4,000 area, aligning with the broader expectations outlined in the annual framework.
Summary:
Gold remains constructive in the short to mid term, but the higher time frames are stretched. The monthly printed an Inside candle, the 2M is extended above its upper Bollinger Band, and momentum readings remain strongly overbought. Importantly, price is also trading far above the annual Bollinger Band, reinforcing the risk of mean reversion on a larger scale. A return into the annual BB range would imply a sizable pullback, potentially on the order of 30% from the top.
From an Elliott Wave perspective, gold sits in the classical target zone for wave c of (B), possibly forming an ending diagonal. While a higher-degree impulsive advance cannot be ruled out, structural overlaps raise caution. If wave (B) completes as a corrective structure, wave (C) could unfold sharply. Near-term momentum favors stability, but the risk of a larger reversal remains elevated.
