Gold Price Chart Technical Analysis – 10 March 2013
The daily gold price chart that is provided here shows the movement of gold price for the past week. Gold price has traded mostly sideways for the past week. It appears that some form of consolidation was taking place as after the big drop since mid February 2013. The sideways consolidation has moved the gold price above and out of the blue trend channel as well as back into the amber trend channel. But the move itself is not a strong recovery type of move and thus it does not carry any weight to the bullish side yet.
We have maintained a bearish view in our previous Technical Analysis of Gold Price. There is no change to that view based on the recent price movement. When we dive into the Elliott Wave count, we note that the sub micron wave 3 (in brown) is still not complete yet. There is further downside and the current sideways movement is most likely sub wave 4 of the sub micron wave 3.
The below Hourly Gold Price Chart shows the detailed hourly move of gold price. In this chart, we note that the wave structure has 11 waves down. This indicates either it is a corrective count or there is further one more downwards wave to go.
The Bearish View
In the bearish count, it is likely that a sideways corrective wave is in progress with further downside expected in the coming weeks. This is inline with the view that the US Dollar Index is heading down temporarily for a counter trend correction before heading higher. A contracting triangle is a likely corrective pattern for this setup as depicted in the first Daily Gold Price Chart (in green) above. An immediate price move to 1600 is expected for this leg before the price moves back down. In this bearish view, the 1-2-i-ii wave formation to the downside in the gold price is maintained with a final target around 1400 region in the medium term.
The Bullish View
The bullish view is expecting a final push down to 1550 region before the gold price heads higher.
It is quite clear that the movement in the US Dollar Index is having a clear effect on the price of gold, silver and other commodities. The US Dollar Index is on a bullish run and further appreciation can be expected in the coming weeks. In view of this, the bearish view for gold (and silver as well as commodities in general) is the preferred view.