Elliott Wave Analysis of Gold and the Impact of US CPI and PMI Data

Gold, one of the most popular precious metals, has recently undergone a corrective setback due to a combination of factors.

As reported earlier this month, the US Consumer Price Index (CPI) exceeded expectations, resulting in a weaker US dollar (USD).

However, after Federal Reserve (FED) officials announced the possibility of another interest rate hike, the USD and yields rose again.

Furthermore, the latest US Purchasing Managers' Index (PMI) data did not show any contraction, leading hawks to remain on the table. As a result, the metals market experienced short-term bearish pressure, with gold undergoing a corrective setback.

Based on Elliott wave analysis on Gold, the price has completed five waves up, followed by a wedge pattern and a reversal down after the fifth wave.

The trendline support was subsequently broken, indicating the start of a correction. This correction is expected to occur in three waves, either in the form of a sharp dip or a sideways correction for a flat. In either case, the A-B-C subwaves are needed before the market can resume higher.

According to swing support and Fibonacci level, the ideal zone for a bounce is at $1934.

ChartDescription automatically generated with medium confidence

One of the reasons for the correction in metals can also be attributed to the rally of the US Dollar Index (DXY). A potential failure breakout and new break higher (out of a channel) next week can make things a bit challenging for bullish price action on gold.

ChartDescription automatically generated

In conclusion, it is important to keep an eye on the developments in the US economy and the potential impact on the metals market.

If you want more Elliott wave updates, then make sure to check out the website at www.wavetraders.com or follow @gregahorvatfx

Happy trading!