Q3 Forecasts – What’s Included:

• Gold
• Silver
• Copper
• Crude Oil

Gold

Gold has had a phenomenal year in H1 2024. The yellow metal has rallied approximately 12% thus far. However, much of that growth came in Q1. The first few days of Q2 started off with a bang, then gold found a medium term top on April 12 and has been trending sideways ever since.

From an Elliott Wave perspective, it appears the April high is wave 3 of an impulse. The double top pattern formed by the April and May highs appeared with a diverging Relative Strength Index.

The second top of the double top is possibly the B-wave. In this case, it carves out like a nice triangle pattern in the wave 4 position.

The minimum waves can be counted as complete and in place for the wave 4 triangle. 

The top of the parallel price channel is holding up gold prices too. The top of the parallel price channel would be a great place to finish off the triangle. As a result, gold may be on the front edges of beginning the wave 5 rally to carry up to new all-time highs.

With that said, If gold prices continue to drift lower, the wave count is slightly altered but the forecast remains the same. The drift lower should be fairly well contained.

If gold drifts lower, then it indicates wave 4 is still under construction. It is common for wave 4 retrace 38% the length of wave 3. The 38% retracement level for gold is at $2274. Therefore, a bump lower to meet that Fib level may be all that is needed to finalise wave 4.

The last line of defence is the blue upward sloping support trend line. We anticipate that gold will hold above this trend line as the next rally would lead to wave 5 higher.

Regardless, once wave 4 exhausts, then another rally will appear in wave 5 to finish off the larger impulse sequence going back to 2023.

This wave count would become broken and void on a price decline through the wave 1 high at $2148. If that were to happen, we would need to rework the Elliott wave count.

Bottom line, look for gold to begin a rally that carries the price higher for several weeks in wave 5. Once wave 5 is in place, then gold is at risk of its largest decline since Q2 2023.

Silver

Silver has experienced a monster year so far in 2024 rallying to its highest price level seen in 11 years. We’re viewing the recent rally as a breakout from a multi-year triangle pattern and first of multiple rallies to the upside.

As silver approached the top in May, the stochastics oscillator showed evidence of bearish divergence. This signals that the near-term up trend is likely over and a deeper correction is needed to consolidate the strong 2024 rally.

Silver prices are approaching the 38% Fibonacci retracement level near $28.00.

If a deeper cut is needed, then the 61% retracement near $25.56 may support prices.

A couple of weeks ago, we thought silver may be getting ready to rally aggressively on an extended third wave as it was stuck in a corrective wave. That aggressive rally is still possible as no rules have been broken regarding it. However, silver would need to rally fairly immediately and from above $28 to keep that forecast as a possibility.

Bottom line, the larger trend remains to the upside though silver may need to use the first portion of Q3 to continue its correction lower. Anticipate a bullish turn between $25.56-$28.00 that eventually leads to new price highs with initial targets near $41-42..

The good news about trading silver (or gold, for that matter) is that you can trade their cross with EUR directly with Alchemy Markets. For example, you can trade XAUEUR or XAGEUR to catch a different trend than the metal priced in US dollars.

Why Would A Trader Want to Trade XAUEUR or XAGEUR?

Sometimes the US dollar is the dominant trend. Therefore, trading XAUUSD or XAGUSD will produce strong trends. However, if gold and the USD are trending in the same direction, then gold’s price will appear to be in a weak trend.

For example, from March 2021 to March 2022, XAUUSD rallied about 23% (top chart). During the same time, XAUEUR rallied about 34% (bottom chart). In fact, XAUEUR comfortably pushed to a new high and held that high above the orange horizontal line while XAUUSD gave up all of those gains.

This is a result of the EUR being a weaker currency than USD during the same time period.

If gold or silver push through the bearish levels noted above, then it may be worthwhile to analyse and consider shorting XAUEUR or XAGEUR. This is because gold and silver are weak and if the EUR is strong, it will push those XAUEUR and XAGEUR cross rates lower.

Copper

Copper has been falling hard since it topped May 20. From its price high of $5.20, copper has broken through a couple of different support zones. Copper is approaching the upper edges of an important price zone that could provide support for its next rally.

According to the Elliott Wave model we’ve applied above, the high from May 20 was the end of wave 3 and copper is currently correcting lower in wave 4. Oftentimes, wave 4 will retrace 38% the length of wave 3 but copper has already exceeded that amount.

In this case that would make sense. Wave 2 carved as a flat looking sideways grind. Then, after an extended third wave, we can anticipate wave 4 to be a sharp corrective pattern that retraces 50-61% of wave 3. That places a downside target for wave 4 at $4.18-4.36. The topside of this target range is also guarded by the previous high in January 2023.

If this forecast is correct, then copper would rally back up to retest the old high of $5.20.

If copper continues to decline below 3.97, then the immediate bullish forecast would be severely damaged and the chances of a further decline to 3.65 and possibly 3.51 are increased. At 3.97 sits the proposed wave 1 high so a decline below it would be an indication the current decline is not wave 4, but some other wave count.

Crude Oil

Crude oil has been on a roller coaster ride so far in 2024. That coaster ride doesn’t look complete.

In Q1 2024, crude oil rallied approximately 17%. Then, in early April, crude oil began a downtrend that carried it down to near the 2023 closing price. Recently, crude oil has aggressively rallied back to near current prices.

The outlook for crude oil in Q3 is bearish. The Elliott wave model we are following suggests that crude oil prices would remain below the April high of $87.60 and make a downturn to retest the December 2023 low at $67.74. 

This next leg down would be considered all or part of a C-leg of a zigzag pattern. Therefore, if crude oil is successful in pushing below $67.74, then it will be a clue the downtrend is a terminal wave of the bearish sequence that began March 2022.

There are two bearish wave counts we are following. The first wave count (above) suggests we are about to decline in wave ((iii)) of C of (Y).

The second bearish wave count (above) suggests that a large symmetrical triangle is about to terminate leading to wave C of a 2-year long zigzag pattern. That means the next decline would be wave 1 of (C) of a zigzag wave.

Depending on the wave pattern at play, the downside targets include $61-63, then $51-55.

Both wave counts are bearish and remain valid so long as crude oil remains below $87.60. If crude oil rallies above $87.60, then we’ll need to re-evaluate the wave count.

Understanding How to Trade Commodities

We included some commodities within this Q3 report because their pricing is all around us. For example, every time you drive down the road, you are reminded of the price of gasoline due to the numerous fuel stations. Crude oil plays a part in the final cost of gasoline.

Therefore, understanding how to trade commodities is important to accessing those visible markets.

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