Gold bounces from $1720-21 lows

Gold might have completed its corrective Wave (b) around $1721 on Thursday. The yellow metal has raised sharply through $1765 mark before pulling back. It is seen to be consolidating its gains for now as bulls prepare for yet another push through $1775-80 zone.

Gold prices had dropped from $1916 through $1677 mark, subdividing into five waves, carving an impulse. As a general guideline of the Elliott Wave Principle, an impulse is followed by a corrective wave in the opposite direction.

Gold prices are producing a zigzag corrective wave since $1677 lows. Further, waves (a) and (b) of the correction are in place around $1834 and $1721 levels respectively. If the above is correct, bulls would be inclined to push prices above $1834 as Wave (c) unfolds.

The potential for Wave (c) to terminate remains through $1865 highs, before bears are back in control. The metal faces immediate resistance around $1780-90 mark, and a break higher would terminate a lower degree impulse wave before correcting lower.

Traders might be willing to initiate fresh long positions now and add further on a pullback towards $1740-50 mark. Potential risk remains just below $1721 while target remains above $1834 mark going forward.

Prepared by

The Profinacademy.com Team