Gold Monthly Analysis
Gold has already tested a 27% decline from the top, a move we warned about back in January. Now the question is whether this was enough, or whether the metal is preparing to move even deeper.
This is where statistics matter.
In this weekly analysis, we examine gold’s evolving structure across multiple timeframes, review the key levels and downside targets, and outline the most probable paths as the metal approaches its next decisive move.
CANDLES
Gold’s message from the April monthly close is rather clear. While it confirmed the bearish direction, it also suggested that the bear market may not be sharp. Instead, it is more likely to be long and painful, a thousand-cuts approach unfolding over multiple quarters, possibly years. This generally aligns with our earlier discussions.
The 2M frame closed with a Dark Cloud Cover, which could receive immediate confirmation in June or take a few periods to challenge the combo before eventually giving way sometime in late summer or fall.
The most surprising move came from Friday’s weekly close. At first, it looked like a confirmation of a short-term bottom on the daily frame. Instead, the weekly technically confirmed a mid-term top, suggesting that the leg lower will likely continue.
Overall, gold remains bearish in the short and mid term, and moderately bearish on the long-term frames, where bearish momentum continues to build gradually.
Annual Candles
(no changes in this section, only a refreshed chart)
In the annual analysis, we noted that gold was trading well above its annual Bollinger Bands—a condition that typically resolves with a move back inside the range. That process is now underway. As the bands shift lower, updated targets point to a 32–48% decline from the peak, reflecting an evolving structure and adjusted expectations.
A move toward the 20 EMA, implying a potential ~64% drawdown, should not come as a surprise. While it may sound extreme, this is how extended moves typically unwind—not in a single move, but through a prolonged reversion process.
ELLIOTT WAVES
Gold potentially completed wave 4 in blue or wave a in red. Based on its character and dynamics, the current wave down fits better as wave b of B in red.
Note the inset showing a classical formation for long-term corrections from Robert Prechter’s book. The entire wave B can be very complex and may take a few months to fully develop.
Long Term
At this point, I continue to watch two possible paths on the long-term chart. The green count has much higher odds, implying that the correction is not over yet.
The most typical target is the intersection of the two rectangles, blue and green, in the $3,320–3,560 area, representing a 37–40% decline from the top. The possible timing is several years.
SUMMARY
Gold remains bearish in the short and mid term, while long-term bearish momentum continues to build gradually. The April monthly close confirmed the bearish direction, but it also suggested that the bear market may not unfold as a sharp collapse. Instead, the structure points to a slower, more painful decline over multiple quarters, possibly years, similar to the bear market that started in 1980.
The key message is the convergence of forecasts from different methodologies. The annual Bollinger Band analysis supports a deeper reversion process, with updated targets now pointing to a 32–48% decline from the peak as the bands shift. A move toward the annual 20 EMA, implying a potential drawdown of about 64%, should not come as a surprise in a prolonged mean-reversion process.
The candlestick structure now supports continuation risk across several major frames. The monthly, 2M, weekly, annual, and potentially quarterly signals are increasingly aligned, while the Elliott Wave view also points in the same direction. The green long-term count remains more probable and implies that the correction is not over yet.
The most typical Elliott Wave target remains the intersection of the blue and green rectangles, in the $3,320–3,560 area. That would represent a 37–40% decline from the top, with a possible timeline of several years. In other words, statistics, Bollinger Band reversion, candlesticks, and Elliott Waves are all converging on the same message: gold may be entering a prolonged corrective phase rather than completing a quick reset.
