Global bond sell-off prevailed over Gold - SocGen

Research Team at Societe Generale, suggests that after completing a 5-wave up cycle (according to Elliott Wave Principles) at $1375 last July, just shy of the 38.2% retracement of the 2011 to 2016 down trend, Gold has embarked on an intermediate correction which accelerated following the confirmation of a Head and Shoulder pattern below $1250/1255.

Key Quotes

“Gold proved unable to stabilize above the multi-month graphical levels of $1207/1200, also the 50% retracement of the whole up move. It is heading towards the interception of crucial supports at $1172, the 61.8% retracement and more significantly the upper bound of the multiyear down sloping channel. Weekly Stochastic indicator is now probing a 3-year floor suggesting $1172 will be a key. In case this gives way, Gold would re-integrate within the multiyear channel and this would indicate the possibility of a deeper and prolonged down move towards $1125/$1100, the 76.4% retracement level and the projected potential for the H&S pattern, with intermittent targets at $1154 and $1138.”

“Short term, $1200/$1207 will be an immediate hurdle.”