For those who’ve been following our EW evaluation commonly, then you already know that on the finish of December we shared our outlook for the months forward, particularly for 2026 in FACE webinars. At the moment, I highlighted that as a result of completely different rate of interest cycles and excessive bearish positioning on the greenback, we anticipated the robust traits seen in 2025 to decelerate. We additionally coated gold and talked about pullback in 2026.
As we will see now, metals have already skilled a notable pullback, and the important thing query is whether or not this correction is full or if it should proceed. Crucial issue right here is the Fed and its fee coverage. For those who examine Fed fee cycles with gold, the correlation has been fairly clear. Every time the Fed was slicing charges, gold tended to rally, whereas durations of holding or mountaineering charges led to consolidation or pullbacks in metals.
Proper now, inflation within the US stays elevated, partly as a result of greater vitality costs since March, and its bacj above 3%. If inflation stays at these ranges for longer, the Fed is much less more likely to reduce charges anytime quickly. Extra seemingly, they are going to keep on maintain and watch for extra information earlier than making any choices.
If that’s the case, then gold might additionally stay in a consolidation section. From an Elliott Wave perspective, we could also be coping with the next diploma wave 4, which might turn out to be bigger and extra complicated, particularly since wave 4 is never smaller than wave two of the identical diploma.
From a time perspective, this might imply the market stays caught in a broad vary round 4500 for some time. There’ll nonetheless be alternatives, however within the present setting, it might be higher to remain affected person and search for entries at decrease ranges, probably nearer to 4000 or 3500, quite than chasing right here.
Grega
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