Looking at gold, it remains in a very strong uptrend, though it has paused due to the impressive recovery in the US dollar. The dollar could continue to see more upside, especially given that inflation came in a bit stickier at 2.4% rather than the expected 2.3%. However, even if the dollar strengthens after the next pullback, there's still a chance that gold will resume its uptrend. Remember, if inflation remains elevated and doesn't trend downward, gold could be seen as an inflation hedge. Additionally, gold tends to perform well during times of geopolitical risk, like the current issues in the Middle East.

In terms of the wave count, we're seeing a very nice three-wave retracement in gold back to the 2600 level, which is a key level from mid-September when the Fed cut rates by 50 basis points. This level could now serve as a good area for the next swing to the upside. Ideally, this push higher could occur in the fifth wave, especially if the price breaks above the 2635 resistance, markets as bullish level, which could open the door to 2700.

On the downside, the channel support is critical, but the most important level for identifying a potential top would be a break below 2532. Only then could we say the top is in place, as this would invalidate the uptrend based on Elliott Wave rules, which dictate that wave 4 must not fall into the territory of wave 1.

Trade Well,

Grega Horvat

Forex Analytix