Gold's Mid-Term Decline Phase in Full Force

From the comments made in my prior articles, Gold was in mid-term topping range, and with that was at risk to a larger-degree price decline. That decline phase is now in full force with the action in recent weeks, and should have more to run before forming the next key bottom.

Gold's 72-Day Cycle

The 72-day cycle is the most dominant cycle in the Gold market, and is shown again on the chart below:

From my 10/27/24 article: "The next larger swing top has been expected to come from this 72-day cycle - which is well into extended range for its peak to form. Once this wave does top, then the downside 'risk' - and ideal price magnet - will be back to the 72-day moving average. However, based upon the position of our 310-day wave, the probabilities are good that the next peak for the 72-day wave will also top the larger cycle."

As mentioned above, our 72-day cycle was into extended range for a peak - with its most recent upward phase able to hold up into pre-presidential election. From there, however, the post-election action has seen the metal getting hammered, falling some 9.2% off the top in just over 11 trading days.

The above action is not uncommon, as markets always fall so much faster than they go up. This is even more true following an extended upward phase, where the rubber band is 'stretched'. As noted, the analysis called for a drop back the 72-day moving average for Gold, which has obviously been met with the sharp decline.

In terms of time, the detrend that tracks our 72-day wave has now locked in on the late- November to early-December window for its next trough to form. In terms of patterns, that decline is anticipated to end up as countertrend - which is not too telling overall - as Gold only has to remain above the June low of 2351.10 (December, 2024 contract), the prior trough for this 72-day component.

As for positioning, due to technical considerations, we entered long Gold (via the GLD) at the 6/7/24 open, and exited that position on 10/21/24 for a tidy profit - thus avoiding the precipitous decline that followed. We will be looking to re-position at some point going forward, once the technical configuration of the market sets itself up.

The 310-Day Cycle

Above the 72-day wave for Gold, there is the larger 310-day cycle, which last bottomed back in October of last year - and is shown on the chart below:

From my last article: "the larger 310-day cycle is currently going over a very wide peak. In terms of price, key resistance is near the intersection of the upper 310-day and four-year cycle channels, which we are currently testing - though this level is rising daily, as the channels are also rising. Once this 310-day wave does top, the probabilities will favor a sharp correction playing out into what looks to be the first few months of next year."

As mentioned in my recent articles for Gold-Eagle, Gold was in the process of testing key mid-term resistance, which was identified as the crossing point of the upper 310-day and four-year cycle channels - which you can see on our 310-day chart. That level capped the rally, giving way to the sharp decline that followed.

With the above said and noted, the mid-term decline phase should have further to run, though should be nearing at least a short-term bottom. In terms of price, the 310-day moving average is viewed as the potential downside 'risk' for the current mid-term down phase, which is projected to bottom around the Spring of next year, but with a large plus or minus variance in either direction.

Going further, the lower four-year channel (shown in red, on our 310-day cycle chart) is seen as key long-term support for Gold. This lower four-year channel is also at or near our 310-day moving average, adding weight to this assessment. In terms of patterns, the mid-term decline phase is anticipated to end up as a larger countertrend affair.

For the bigger picture, once the next 310-day trough is in place, then the probabilities will favor another sharp rally of some 20-25% or more playing out in the months to follow, before eventually topping the larger-tracked four-year cycle. From there, a much bigger percentage decline would be expected to play out.

Gold's Short-Term View

For the very short-term, even with a mid-term downward phase deemed to be in force for Gold, the metal should be at or nearing a very sharp short-term rally, coming from the smallest cycle that we track, the 10-day component:

With the above said and noted, the next upward phase of our 10-day cycle - once confirmed in force - would be expected to see a sharp rally, ideally taking prices back to - at minimum - the 10-day moving average. Having said that, due to the position of a larger tracked 20-day wave, there would be the potential for that rally to move on up to the higher 20-day moving average.

Having said the above, the patterns will strongly favor the coming short-term rally for Gold to end up as a countertrend affair, due to the position of the bigger 72 and 310-day cycles. With that, we have a key upside 'reversal point' for the short-term cycles, which - when taking out to the upside - will be the trigger for the coming short-term rally, with exact details always noted in our thrice-weekly Gold Wave Trader report.

Jim Curry
The Gold Wave Trader

Market Turns Advisory
http://goldwavetrader.com/
http://cyclewave.homestead.com/

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