Bullish Flag On Gold - New Highs In 2021?

Low interest rates and QE from central banks caused strong bullish trend across different assets. But what we see for the last few months is pullback on gold and US bonds, while stocks are printing new highs due to covid-19 vaccine that brings back optimism for move” back to normal life and economy” in 2021. However, stocks are very high and they may face a retracement next year, maybe even based on “buy the rumour sell the news impact”. In such case investors may look to hide in bonds or metals.

From a technical point of view we see US Treasurys bullish on a weekly scale, and they are unfolding five waves up from 2018 low where 5th wave is still missing as shown on 10 year US notes chart. If you are familiar with Elliott Waves, then you know that impulses need to be completed with five waves so new highs can be in the cards in 2021. In fact, current price action since March on the 10 year is slow and sideways, so based on personality and characteristics we believe it’s corrective wave 4. If we are correct, then more upside on 10 year is also going to be supportive for gold that may breakout of a bullish flag. Some traders and investors may also look at TLT here around current trendline support.

Happy holidays and all the best in 2021.

Trade well!

GH