• 7 hours 3 Restaurant Stocks In Full Recovery Mode
  • 15 hours Bitcoin Is Driven By Testosterone
  • 5 days Quantum Computing Is The Newest Megatrend In Silicon Valley
  • 7 days How To Invest In The Cybersecurity Boom
  • 8 days Investors Are Patient With Unprofitable Giants
  • 10 days Wells Fargo Back In The Scandal Spotlight Once Again
  • 12 days 5 Stocks To Keep A Close Eye On This Year
  • 14 days As Auto Giants Flail, Look To Chip Stocks For Gains
  • 14 days Central America Is Ready For The Bitcoin Hustle
  • 16 days China’s Video Game Restrictions Unlikely To Slow Down Booming Industry
  • 17 days Top Performing Stocks As Inflation Fears Grow
  • 18 days US Airline Stocks Take A Beating On New EU Restrictions
  • 19 days This IPO Could Open Sustainable Fashion Floodgates
  • 20 days Crypto Crime Nets Another $2B Fraudster
  • 22 days This Week’s Hottest Meme Stocks
  • 24 days Why World Markets Should Be Watching Germany Closely
  • 26 days Could ‘Cultured’ Meat Rival The Plant-Based Megatrend?
  • 28 days ‘Easy Money’: Crypto Is Still Attracting Newbie Investors
  • 30 days Foreign Syndicates May Have Stolen Up To $400B In COVID Benefits
  • 31 days Gold Jumps Above $1800 Ahead Of Jackson Hole Summit
Trading On The Mark

Trading On The Mark

Trading On The Mark

Our work is grounded in several technical methods. We make use of Elliott Wave, Gann techniques, Fibonacci relationships in price and time, cycles, and other…

Contact Author

  1. Home
  2. Markets
  3. Other

Gold and Silver Index Can Still Go Lower

While we believe precious metals are trying to establish an important low nearby, we acknowledge that the chart patterns for gold and silver futures have been difficult to count for more than a year. Seeking clarity, we have turned to an examination of the Philadelphia Gold and Silver Sector Index (symbol XAU), which typically follows the prices of metals in the big picture. The index needs to do a bit more work before it prints a completed downward count, but it does not have much farther to fall in terms of price.

When gold and silver made their highs in 2011, XAU was already hinting at the prospect of a reversal by making slightly lower highs. In fact, the index often diverges slightly from metals prices ahead of turns on a faster time frame, such as on a weekly chart (not shown here). The divergence in 2011 wason a larger scale.

Amid the competing forces of momentum for metals and exhaustion for the index, it is not surprising that the first downward move was sloppy. On the other hand, the index showed a nicely defined structure throughout the remainder of the decline, with wave (iv) behaving just as an Elliott wave textbook wouldpredict.

XAU Monthly Chart

Counting downward from the end of wave (iv) in late 2014, it appears that the index is tracing out a regular five-wave impulsive (non-overlapping) move into a low. The idea that the index might find support nearby for the end of small wave 'iii' matches well with our expectation that the Dollar Index is making an interim high around now. A renewed decline into early or middle 2016also would fit with our Dollar projection.

Traders working on weekly or daily time frames might look for a small bounce to approach resistance near 55.64 in coming weeks, but we caution that another low should be on the way. After XAU has seated a final low - perhaps near the Fibonacci extension level at 28.54 - we would begin lookingfor a sizeable upward retrace into 2017.


If this type of analysis is helpful in your trading, set yourself up for timely notifications of market developments by requesting our newsletter!


Back to homepage

Leave a comment

Leave a comment