Related Topics
Metals , Investing

Why Gold Was Set to Rise BEFORE the U.S. / Iran Clash

Get insight into a financial market’s “alternate” Elliott wave count

by Bob Stokes
Updated: January 09, 2020

Conventional wisdom says that gold is a safe haven investment so it has a good chance of rising in value during times of uncertainty.

So, a January 3 Marketwatch news item is not surprising:

Gold hits 4-month high after U.S. strike kills key Iran military leader

In other words, the headline implied that the U.S. strike "caused" gold to hit a 4-month high.

However, the Elliott wave model indicated a price rise before the Iranian general was killed.

Our Dec. 27 U.S. Short Term Update showed this chart and said:


Given the recent action, we've adopted the alternate wave count in gold that we illustrated on Monday.... Under this scenario, gold will continue to work its way higher.

In case your new to Elliott wave analysis, the Wall Street classic book, Elliott Wave Principle, provides insight into the meaning of "alternate" wave count:

The best interpretation [of a market's Elliott wave price pattern is] sometimes called the "preferred count."

The second best interpretation [is] sometimes called the "alternate count." Because applying the Wave Principle is an exercise in probability, the ongoing maintenance of alternative wave counts is an essential part of using it correctly. In the event that the market violates the expected scenario, the alternate count puts the unexpected market action into perspective and immediately becomes your new preferred count.

This is why it is imperative to stay on top of a market's price action. The second-best Elliott wave interpretation today can become the preferred interpretation tomorrow as a price pattern unfolds.

Getting back to gold, the price of the precious metal climbed even higher after hitting that 4-month high on Jan. 3. And, again, headlines linked the continued rise to the ongoing clash between Iran and the U.S.

This is from a Jan. 7 Bloomberg article:

Gold surged above $1600 an ounce for the first time in more than six years after Iran attacked military facilities in Iraq hosting American troops... .

Yet, as mentioned, the continued price rise was anticipated by our Dec. 27 U.S. Short Term Update.

So, the evidence suggests that neither the U.S. airstrike or Iran's retaliation "caused" gold's price to rise. The "cause" has been investor psychology, as reflected by Elliott waves.

The important question now is: What are Elliott waves suggesting about gold's next price move?

Get the answer with no obligation by following the link below.

How EWI Challenges Conventional Investment Wisdom

Our publications are filled with independent analysis -- charts and forecasts you will not get from most market pundits or the mainstream financial press.

You see, EWI does not look to news events (like the U.S. / Iran conflict) to forecast what financial markets will do.

Yes, conventional wisdom says "news drives markets." Yet, we have found no evidence for that claim.

Instead, our Elliott wave experts examine the market itself.

Learn how our experts do this, risk-free for 30 days. Look below to learn how to get started.

Acadia Pharmaceuticals Soars to Record Highs: Were You in Line When it Was Time to Buy?

In April 2019, Acadia shares did not look like a "buy" -- earnings were down and the company was under investigation. But now see what Trader's Classroom said about where the stock would go, and what followed.

Russia: How Financial “Complacency” Morphed into “Crisis”

In January, one of EWI’s global analysts showed the strong rise in Russian stocks and issued a cautionary note to subscribers. Learn how that warning came just in the nick of time. These two charts say it all.

Cotton Futures: From Multi-Year High -- TO -- Decade Low. It's Not About the Virus!

In mid-2018, news stories about cotton led traders to expect a rally. Yet our June 2018 Monthly Commodity Junctures anticipated a very big decline. See what actually happened, via Chart of the Day.