Gold market analysis

"Gold Prices May Be on the Verge of a Deep Correction" 6/8 10:00am Completed
Yesterday's gold price movement largely conformed to my expectations. The spot gold price reached a low of $3,350, which was below the end of wave 3 at $3,385.44 and the 38.2% retracement level of wave 4 at $3,356.73. Subsequently, wave 5 began, with its target calculated as 38.2% of the amplitude of wave 3, which is $3,389.61. Yesterday's high of $3,390.51 was $0.9 above this target. Additionally, yesterday's expectation was that gold prices would reach a short-term peak on that day, suggesting that a potential ABC correction wave might be in the works, with a target of $3,314.86. 

According to the wave theory, if the low of wave c falls below the top of wave 1, a higher-level (3) wave will unfold. The movement from July 31 to August 6 becomes a higher-level (1) wave. However, the wave theory only stipulates that wave 3 cannot be the shortest but can be the longest. Assuming that the rise of wave 5 is equal to that of wave 3, the gold price could rise to $3,453.7. Therefore, investors still need to pay attention. If the gold price does not show a significant adjustment today but instead further breaks through yesterday's high of $3,390.51 and maintains a strong trend, it may challenge the July 23 high of $3,439.09. 

Gold prices may be affected by the remarks of the Federal Reserve Board members. 

On the news front, several Federal Reserve officials will speak early Thursday morning (tonight). If they hint at a high probability of a rate cut in September, gold prices may rise on the back of this. However, gold's performance since last Friday has already reflected market expectations of a September rate cut, so the potential increase in gold prices may not be too significant. Investors can calculate resistance levels based on the relationship between the 5-wave and 3-wave movements. At 38.2%, the resistance level is approximately $3,390, and at 61.8%, it is around $3,414. 

$3,350 is an important support level in the spot market. 

Since June, the daily fluctuation range of gold prices has mostly been between 20 and 60 US dollars. At the current low of 3,373 US dollars, a rise of 60 US dollars would equal 3,433 US dollars, slightly higher than the 78.6% of the 3rd wave's equivalent to the 5th wave's increase, which is 3,431.5 US dollars. Conversely, if the gold price drops, at the current high of 3,383.65 US dollars, the major support level is at 3,323.65 US dollars. Based on the maximum increase since July 31, the 50% and 61.8% retracement levels can be seen at 3,329.36 and 3,314.92 US dollars respectively. The key support level for gold prices within the day is clearly 3,350 US dollars. Once this level is breached, 3,329 and 3,314 US dollars will be the next targets to test. This morning, the gold price rose slightly and then fell back, showing a bearish signal on the hourly chart. It is expected that for most of the day, the gold price will fluctuate between 3,350 and 3,385 US dollars, and a breakthrough may occur after the remarks of the Federal Reserve Board members tonight. 

The above content is for reference only and does not constitute investment advice. 

MTF Special Analyst Zheng Guangfu