Gold Reaches Extreme Zone, Buyers Expected to Step In

Gold (XAUUSD) has been declining within a cycle that started from its August peak at 4698.17, according to an Elliott Wave analysis. The price has now reached the extreme zone and is showing a reaction from the area.

The analysis suggests that Gold is forming a three-wave pattern from the recent August peak. The structure of the pullback appears incomplete, indicating further downside could be seen before the next bounce develops.

Using the Fibonacci Extension tool to measure the Equal Legs area, the ideal target zone comes in at 4112.6-4014.2. From this zone, buyers are expected to step in and take control, potentially driving the price higher in at least a three-wave bounce.

The commodity found buyers right at the Equal Legs area, producing a reaction from the zone. However, it's still too early to determine with high confidence whether the cycle has already been completed. The preferred view suggests that the cycle is taking the form of an Elliott Wave Zig Zag pattern, meaning another low could be seen to complete five waves within the red C leg.