Gold eyes wave five extension: Elliott Wave count signals bullish continuation

Gold prices have soared to unprecedented levels, driven by escalating trade tensions between the U.S. and China, which have unsettled global financial markets. The precious metal, traditionally a safe-haven asset, is experiencing heightened demand as investors seek refuge from market volatility and inflationary pressures.​

Fundamental drivers: US-China trade conflict and inflation concerns

The recent imposition of steep tariffs by both the U.S. and China has intensified fears of a prolonged trade war. The U.S. has enacted tariffs as high as 145% on Chinese imports, prompting China to retaliate with tariffs up to 125% on U.S. goods . These measures have disrupted global supply chains and raised concerns about rising costs for consumers and businesses alike.​

In response to the trade dispute, China has reportedly begun reducing its holdings of U.S. Treasury securities, contributing to a sell-off in the bond market . This move has led to a spike in U.S. Treasury yields, with the 10-year yield climbing to 4.516% . Higher yields increase borrowing costs and can stifle economic growth, further fueling investor anxiety.​

The combination of trade tensions and rising yields has weakened the U.S. dollar, making gold more attractive to investors. As a result, gold prices have surged, with spot gold reaching a record high of $3,245.28 per ounce on April 11, 2025.​

Elliott Wave perspective: Potential for continued upside

The current rally in gold has captured the attention of Elliott Wave traders, with two primary scenarios unfolding: a conservative count that respects a Minor wave structure, and an aggressively bullish count that suggests this move could be part of a larger Minute degree advance. Both interpretations are valid within the wave framework, though each carries different implications for the size and scope of the next move.

Conservative count: Minor wave four within intermediate wave (five)

In the more restrained view, gold is progressing through an Intermediate Wave (5) with the market currently pausing in Minor Wave 4. This interpretation implies:

• The sharp rally from the April lows marked Minor Wave 3.
• The current sideways consolidation is Minor Wave 4, which typically unfolds as a flat, triangle, or zigzag correction.
• A final advance in Minor Wave 5 is expected to complete the broader Intermediate Wave (5).

Key support level: $3,022 remains critical. As per Elliott Wave rules, Wave 4 must not retrace into Wave 1 territory. A breakdown below this level would invalidate this count and force a reassessment.

Implication: Patience is key here. Traders should watch for the consolidation to complete and await confirmation of Minor Wave 5, ideally via a breakout above recent highs.

Aggressively bullish count: Minute degree impulse in play

 

For those leaning toward a more bullish scenario, there’s reason to believe that the recent impulse is unfolding at the Minute degree, making the rally structurally stronger and with more upside potential.

• The post-April surge is part of a Minute Wave 1 advance.
• Within that structure, we’ve seen sub-waves i, ii, iii, and now likely iv, nearing completion.
• If correct, this places gold on the verge of a Minute Wave v rally—potentially a powerful upward thrust.

This count suggests a larger bullish cycle is forming, which could ultimately reshape the higher-degree wave structure altogether.

Key Trigger: A breakout from the current sideways action without violating $3,022 (the lower bound of Wave ii) will increase the probability of this bullish count playing out.

Conclusion: Monitoring key levels amid market uncertainty

Investors should closely monitor gold's price action, particularly the $3,022 support level, to gauge the validity of the current Elliott Wave count. A sustained move above recent highs would confirm the continuation of the bullish trend, while a break below key support could signal a deeper correction.​

Given the ongoing trade tensions and their impact on global markets, gold is likely to remain a focal point for investors seeking stability amid uncertainty.​